Hazard Insurance – Everything You Need to Know

Buying a house is one of the biggest investments people make in their lives. But what happens when unexpected events threaten to damage or destroy their homes? This is where hazard insurance comes in handy. This article will provide you detailed information on what hazard insurance is, what it covers, and how to purchase it.

What is Hazard Insurance?

Hazard insurance is a type of insurance that protects homeowners from damages caused by natural disasters or other hazards, such as fire or theft. It goes beyond regular homeowner’s insurance, which only covers damages caused by certain events like windstorms, hail, and lightning.

Hazard insurance policy typically covers the structure of the home, the belongings inside the home, and other structures like sheds, garages, or fences within the property boundary.

It is important to note that hazard insurance is not mandatory by law. However, most mortgage companies require homeowners to purchase hazard insurance because it protects their investment.

What Does Hazard Insurance Cover?

The coverage of hazard insurance policy can vary from one insurer to another. However, here are some common perils that most hazard insurance policies cover:

It is important to read the policy carefully to understand the exact coverage and exclusions.

How Much Does Hazard Insurance Cost?

The cost of hazard insurance depends on various factors, such as the location of the property, the age of the home, the value of the property, and the coverage amount.

According to a 2019 study by the National Association of Insurance Commissioners, the average cost of homeowners insurance, including hazard insurance, is $1,192 per year. However, this can vary significantly depending on the state and the home value.

How to Purchase Hazard Insurance?

If you are purchasing a home, your mortgage lender will require you to purchase hazard insurance. Most lenders have a list of recommended insurance providers, but you can also shop around and get quotes from different insurers to find the best deal.

If you already own a home and do not have hazard insurance, you can contact a licensed insurance broker to purchase a policy. Make sure to read the policy carefully and ask questions to understand the coverage and exclusions.

FAQ

What is the difference between hazard insurance and homeowners insurance?

Hazard insurance is a type of insurance that protects homeowners from damages caused by natural disasters or other hazards. It is typically included in homeowners insurance policies but may be offered as a separate policy. Homeowners insurance, on the other hand, covers damages to the home caused by a variety of perils, including damage from weather, fire, theft, and liability issues.

Is hazard insurance mandatory?

No. Hazard insurance is not mandatory by law, but most mortgage lenders require homeowners to purchase it to protect their investment.

What is not covered by hazard insurance?

Hazard insurance does not cover damages caused by floods or earthquakes. It also does not cover damages caused intentionally by the homeowner or their family members.

How much hazard insurance do I need?

The amount of hazard insurance you need depends on the value of your property and the coverage amount you want. You can consult with an insurance agent or broker to determine the appropriate coverage for your needs.

Can I cancel my hazard insurance?

Yes, you can cancel your hazard insurance policy at any time. However, if you have a mortgage, your lender may require that you maintain hazard insurance.

Conclusion

Hazard insurance is an additional type of insurance that homeowners can purchase to protect their investment from unexpected events like natural disasters or theft. Reading the policy carefully and understanding the coverage is essential before making any purchase. Speak to a licensed insurance agent or broker to determine the appropriate coverage for your needs.