Related question: how much insurance for contents of house? I was looking at my policy recently and seems like those amounts were high, even accounting for the fact that in a catastrophic fire there could be four cars worth about $100k total at risk (multi generational house). I'm sure the clothes and furniture in my house would not be that much to replace, appliances a bit more but not high end. How does one figure this? Am I missing other things in the household contents? (No valuable jewelry)
Most contract have only a couple of options for selecting personal belongings coverage on a Homeowner's policy. I usually see something like your options are either 50% or 70% of the dwelling limit.
Also, you mentioned cars as valuable assets; keep in mind that most home policies specifically exclude coverage for cars, even if they burn down in a house fire. Comprehensive coverage (if you carry it) would pay it from the Auto policy in that case.
Regarding your other questions, I calculated my family's coverage need by doing a thought exercise: If my house burned down right now, and I went to buy EVERYTHING again, brand new, at non-sale prices, how much would that add up to? I figured in hallween decorations, cutlery, clothes, furniture, spices in the spice rack, etc.
I came up with a figure that was half of the lowest amount of coverage I could get, so I went with that lowest amount option. It helps that our fanciest clothes would be maybe a dress for her at $150 non sale and a suit for me at $300 non sale. Our plates are all Target/Walmart quality, and our decorations are Big Lots/Dollar Store quality.