Homeowners insurance protects three things: Your home, its contents, and, indirectly, your bank accounts.

Let’s start with your home. A standard homeowners policy (known as an HO-3 policy in insurance lingo) will protect you from stuff like fires, fallen trees, even the occasional rogue meteor. Notice how we didn’t mention floods, earthquakes, war or nuclear accidents—those events are specifically not covered by a standard policy. You can, however, buy add-on policies for floods and earthquakes if they’re an issue for you. War and nukes? Sorry.

A standard policy will also protect your possessions from said disasters as well as theft. But a standard policy isn’t a blank check: there’s a limit to how much you can collect. If you have specific items of value, you can pay a little extra each year to insure them for their full replacement value.

Now, if some guy’s on your property and slips and falls and sprains his ankle, he might sue you for his medical expenses. Homeowners insurance covers you for this as well. And like the examples mentioned above, you can pay more to get extra coverage if you throw keggers on your roof-deck every so often.

Homeowners insurance isn’t required by law, like auto insurance. But mortgage companies usually require you to get it before they’ll give you a loan. And, you really ought to have it – what’s more important than your home, its contents and you? OK, maybe health, family, and world peace.