How much coverage is enough?
It is fairly simple to evaluate how much property coverage to purchase. You consider the cost to replace your home and possessions and then purchase a homeowners insurance policy in an amount sufficient to cover a total loss. If you are comfortable taking on some of the risk to reduce the amount of premium you pay, you can elect a higher deductible.
It is, however, somewhat more difficult to determine how much liability insurance is sufficient. There is no limit to the amount of damages someone can sue you for in court. Just because the average home insurance policy provides $100,000 of personal liability limits does not mean that amount is sufficient. You should consider how much you have in assets if someone were to sue you and win a judgment in court. Generally, the more assets you have, the higher the liability insurance limits you should purchase to protect those assets.