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What Is Hazard Insurance (Explained: All You Need To Know)

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What Is Hazard Insurance

Hazard insurance is a type of policy protecting you from damages caused to the structure of your home or other structures on your property by a covered event.

The elements of your home covered are essentially the following:

  • The physical structure of your home
  • Other structures such as independent garage 
  • Fences
  • Sheds 

In many cases, lenders financing the purchase of a home will require the homeowner to get hazard insurance in order to protect the structure of the property from damages.

Typically, when you purchase your standard homeowners’ insurance, you will get protection for the structure of your property.

As such, hazard insurance is generally included as part of your dwelling coverage or home insurance.

Since mortgage lenders refer to the term “hazard insurance” quite often, it appears as if hazard insurance is a type of insurance coverage that can be purchased separately from your homeowner’s insurance.

Hazard Insurance Coverage

The most common hazards triggering your hazard insurance coverage are:

  • Fire
  • Hail
  • Severe storm
  • Sleet 
  • Lightning 
  • Theft 
  • Vandalism 
  • Falling objects
  • Explosions
  • Smoke damage 
  • Damage caused by wind
  • Damage caused by the weight of snow or ice
  • Water damage caused by household appliances or pipes
  • Power surges or short-circuits
  • Damage from aircraft 
  • Damage caused by vehicles 
  • Riots 

Keep in mind that although the above provides you a list of what’s usually found in hazard insurance, it does not mean that you effectively have them in your policy.

Be sure to read the terms and conditions of your policy to ensure you know exactly what’s covered.

What’s Not Covered

Generally, your hazard insurance will not cover the following:

  • Personal property damage
  • Personal injuries 
  • Equipment breakdown 
  • Valuable items 
  • Normal wear and tear of your property 
  • Sewer backup 
  • War or nuclear action 
  • Intentional damages caused by the owner 
  • Mold damage 

In addition, your standard hazard insurance will not cover you for:

  • Floods
  • Earthquakes
  • Landslides
  • Mudslides 

If you live in a flood-prone or earthquake-prone area, you’ll need to make sure that you get flood insurance or earthquake insurance coverages for those hazards.

Included In Your Homeowners Insurance

When you get a home insurance, you will find that you are covered for damages caused to the structure of your home due to various hazards.

In essence, your home insurance already includes coverage for hazards.

Your home insurance typically provides you with the following types of coverages including:

  • Dwelling coverage
  • Other structures coverage
  • Personal property coverage
  • Liability coverage 
  • Medical payment coverage 
  • Additional living expense coverage 

Your dwelling coverage covers the physical structure of your home.

Other structures coverage covers any structures other than your actual home such as a fence, shed, detached garage, or other.

Personal property coverage provides you coverage with regards to your personal belongings in your home such as clothing, house goods, electronics, and others.

Standalone Hazard Insurance

If you want protection for standard and basic hazard protection, your general homeowner insurance should be good enough.

However, if you need protection for specific types of risk, then you will need to consider getting standalone hazard insurance.

Property owners in high-risk areas will need to consider getting insurance to cover things like:

  • Floods
  • Landslides
  • Sinkholes 
  • Earthquakes 
  • Hurricanes 
  • Tropical storms 

Make sure you look at the specific coverages in your policy to see what are the “covered perils” or insured hazards so you do not end up with any surprises.

Mortgage Lender Requirement

If you are looking to buy a new home or get a mortgage on your property, you will likely need to consider getting hazard insurance.

The reason why you need hazard insurance is that most mortgage lenders will specifically require that you get coverage for hazards that may affect the structure of your home.

The good news is that by getting homeowner coverage, you will satisfy your lender’s requirement in being covered for hazards as “hazard insurance” is included in your home insurance.

What Is The Difference With Homeowners Insurance

In essence, hazard insurance covers damages to the structure of your property and it is actually included in your homeowners insurance coverage.

As such, if you are getting standard homeowners insurance, you are also getting hazard insurance included as part of it.

What’s important to note is that hazard insurance will only cover the structure of your property, nothing else.

For example, if you suffer property damage or you have guests suffering bodily harm, you will need to have other coverages to cover those risks.

On the other hand, if your property structure is damaged as a result of a covered peril, like fire or theft, then your hazard insurance will kick in to provide you financial coverage as per your policy.

Frequently Asked Questions

Let’s look at the most common questions relating to what is hazard insurance on a home.

Do I Have To Pay Hazard Insurance On My Mortgage

In most cases, your lender will require, as part of the conditions to lend you money, that you have hazard insurance on your mortgage.

However, hazard insurance is not a separate type of policy that you must purchase in addition to your homeowners insurance.

In fact, your typical homeowner insurance will already include coverage for damages caused to the structure of your home by covered hazards.

What Is Included In Hazard Insurance

Generally, hazard insurance covers:

  • Fire
  • Hail
  • Severe storm
  • Sleet 
  • Lightning 
  • Theft 
  • Vandalism 
  • Falling objects
  • Explosions
  • Smoke damage 
  • Damage caused by wind
  • Damage caused by the weight of snow, ice, or sleet 
  • Water damage caused by household appliances or broken pipes
  • Power surges or short-circuits

Do I Need Hazard Insurance

As a homeowner, you will need to make an important decision about the type of insurance you get to protect your asset.

In most cases, you will benefit from hazard insurance by signing up for a home insurance with a reputable insurance company.

As a result, you do not need to get separate coverage specifically to cover hazards as you will likely have the basic coverage in your home insurance.

What you should consider is whether or not you want to include specific types of natural disasters or events of loss and whether or not your coverage limit is suitable for you.

How Much Is Hazard Insurance

The cost of getting hazard insurance will depend on a variety of factors.

As such, it’s not possible to give you a cookie-cutter approach so you can calculate the cost of your insurance premiums.

To help you better assess the cost of your hazard insurance, note that insurance companies will look at factors such as:

  • The value of your home
  • The amount of coverage you are getting
  • The value of your deductibles 
  • Where your property is located 
  • Your prior claim history

What Is A Hazard Insurance Takeaways 

So there you have it folks!

What does hazard insurance mean?

What is the difference between hazard insurance and homeowners insurance?

According to the Consumer Financial Protection Bureau (CFPB), hazard insurance is a term used to refer to a specific type of coverage found in your homeowners insurance.

More specifically, hazard insurance will protect the physical structure of your home or extended structures to your home.

Hazard insurance actually refers to a portion of your standard homeowners insurance policy and does not represent a standalone type of insurance.

This should not be confused with other types of insurance like catastrophe insurance being standalone coverages ensuring natural disaster events.

I hope I was able to answer your main question: what is homeowners hazard insurance, why do you need it, and how it works.

When you’re shopping around for insurance, be sure to contact several insurance providers, get different quotes, have your insurance agent explain the details of the quote to you, and then decide based on your true needs.

Good luck with your hazard insurance!

Let’s look at a summary of our findings.

Understanding What Is Hazard Insurance

  • Hazard insurance is a term used to refer to a specific risk coverage of a general homeowners insurance policy
  • This type of coverage protects the property’s structure against covered events like fire, storms, natural events
  • Very often, mortgage providers and lenders will require that homebuyers ensure they have hazard insurance insuring the physical structures of their home during the mortgage term
  • It’s important to read the specific terms and conditions of your policy to see what risks and hazards are covered by your policy
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