Everyone should ask this question periodically but few actually do, only to find out the hard way that they were underinsured.  Consider these points to help you figure out if you are adequately covered:

• Make sure your homeowner's policy is based on replacement cost - that is, what it would cost to rebuild your house from the ground up. This value can change, based on the cost of labor and materials.  Ask your insurance company to estimate replacement costs based on your home's size, location and materials.  Be sure to include all improvements or additions.  If you have an older home, you may need to add an "ordinance" or "law" supplement to your policy to cover rebuilding according to current building codes.
• Review your policy to determine which natural disasters are covered and which are not.  Most do not cover flooding, for example.
• Make sure the contents of your house are adequately insured. Typically, homeowner's policies cover the contents for 50 to 70 percent of the amount of insurance on the house itself.  Take an inventory of the items in your house to determine if this is enough.  If not, you can add riders to your policy to cover certain items that are more valuable.  In addition, consider insuring the contents at replacement cost rather than actual cost.  It is usually worth the extra premium.
• Consider having liability insurance to protect from lawsuits. Most policies have some liability coverage, but depending on your type of work and where you live, an umbrella policy may be worth considering.  This type of policy covers you for a much higher dollar amount, and it gives you broader coverage, including libel, slander and invasion of privacy, which are not covered under standard policies.