Home Hazard Insurance: What You Need To Know

Hazard insurance is a type of insurance that covers damage to the physical structure of a house from natural disasters or other perils such as fire, wind, hail, lightning, explosions, and theft or vandalism. It is typically required by mortgage lenders to protect their investment and is included as a component of homeowners insurance. Hazard insurance does not cover damage to personal belongings or injuries sustained by others on the property, and it may exclude coverage for certain natural disasters like floods and earthquakes, which require separate policies.

What does hazard insurance cover?

Hazard insurance is a type of coverage that is included in standard homeowners insurance policies. It covers damage to the structure of your home and is often required by mortgage lenders to protect their investment. Hazard insurance covers damage caused by natural disasters, such as fire, tornadoes, hail, wind, and lightning strikes. It also covers damage caused by theft and vandalism.

• Fire damage: If a fire damages your home, hazard insurance will cover the cost of repairs or rebuilding. If the damage forces you to vacate your home, loss of use coverage can also help pay for temporary lodgings.
• Hail damage: Although hail is often associated with vehicle damage, it can also cause significant damage to homes, which would be covered by hazard insurance.
• Lightning damage: Lightning strikes can cause extensive damage to a home, and this type of damage is typically covered by hazard insurance.
• Theft: If your home is damaged during a theft, hazard insurance may cover the cost of repairing the structural damage. Homeowners insurance will also typically protect your possessions against theft.
• Vandalism: If your home is vandalised, hazard insurance can help cover the cost of repairs.
• Fallen trees: If a tree falls and damages your home's structure, hazard insurance will usually cover the cost of repairs.
• Vehicle collisions: In the unfortunate event that a vehicle runs into your home, causing structural damage, hazard insurance can help cover the cost of repairs.
• Explosions: Explosions, often caused by gas leaks, can result in massive structural damage to homes. Damage caused by explosions is typically covered by hazard insurance.

It is important to note that hazard insurance does not cover damage to personal belongings or injuries sustained by others while on your property. Additionally, it does not cover damage resulting from certain perils, such as flooding and earthquakes. For these types of events, separate policies or additional coverage may be needed.

What doesn't hazard insurance cover?

Hazard insurance is part of a homeowners insurance policy that covers damage to the structure of your house. It is important to note that hazard insurance is not a stand-alone type of coverage and is usually bundled with a homeowners insurance policy.

Hazard insurance does not cover damage to personal belongings or injuries sustained by others on your property. It also does not cover damage resulting from certain perils, including:

• Flooding
• Earthquakes
• Normal wear and tear
• War or nuclear action
• Intentional damage by the homeowner

If you live in an area prone to flooding or earthquakes, you will need to purchase additional coverage or a separate policy to protect your home from these hazards.

How much does hazard insurance cost?

The cost of hazard insurance depends on several factors. Hazard insurance is bundled with homeowners insurance, so you'll pay for it as part of your home insurance costs. The cost of that coverage depends on how much dwelling coverage you purchase. The more coverage you need, the more you'll pay.

The national average annual cost of homeowners insurance by dwelling coverage amount is as follows:

• $1,201 for $200,000 in coverage
• $1,754 for $300,000 in coverage
• $2,303 for $400,000 in coverage
• $2,855 for $500,000 in coverage
• $3,406 for $600,000 in coverage

Other factors that affect the cost of hazard insurance include the cost to rebuild your home, your ZIP code, your coverages and home insurance deductible, area access to fire and other emergency services, and whether you have smoke detectors and other safety equipment installed in your home.

You should also expect to pay higher rates if you have poor credit or a history of filing insurance claims.

The cost of hazard insurance also depends on factors related to the home itself, including:

• Your home’s square footage
• The location of your home
• The construction type of your home
• Your roof type — hip, gable, or flat
• The number of bathrooms in your home

Insurers set rates based on how likely you are to file a claim. If you live in an area that experiences frequent natural disasters, or your home is older and more susceptible to damage, that can significantly impact your rates.

Is hazard insurance required?

Hazard insurance is a requirement for anyone looking to take out a mortgage loan on a newly purchased home. This is because mortgage companies and lenders require you to have hazard insurance to get a loan. This protects their investment until the loan is paid off.

In general, hazard insurance is one of the coverages in a standard homeowners policy. It provides coverage for damage to the structure of your home caused by hazards or perils such as fire, storms, and natural disasters. It does not cover damage to personal belongings or injuries sustained by others on your property.

While hazard insurance is not required by law, most lenders do require homeowners to carry insurance to protect their investment. This requirement is usually met when purchasing homeowners insurance.

If you do not have a mortgage, carrying hazard or homeowners insurance is still beneficial. It can protect your equity and savings if you experience a significant loss.

How to buy hazard insurance

Hazard insurance is an essential part of protecting your property as a homeowner. It is not the same as homeowners insurance, but it is a subsection of it. Hazard insurance is a requirement for getting a mortgage loan. It covers damage to the structure of your home and can be bundled with homeowners insurance for a more comprehensive coverage plan.

• Understand the difference between hazard insurance and homeowners insurance. Hazard insurance specifically covers damage to the structure of your home, while homeowners insurance covers a broader range of events, such as stolen personal belongings, damage to your home's structure, or injuries that occur in the home.
• Discuss coverages with your insurance company to learn what is included or excluded in their hazard insurance policy. Ask about any additional coverages you may need, especially if you live in an area prone to natural disasters like flooding, earthquakes, or high winds.
• Compare quotes from multiple insurance providers. Most major insurers sell homeowners policies that include hazard insurance. You can request quotes online or through an independent insurance agent. Comparing quotes will help you find the right coverage at an affordable price.
• Consider bundling your insurance policies. If you already have car insurance, contact your existing insurer to inquire about bundling discounts. Many insurance companies offer reduced rates if you purchase multiple types of insurance from them.
• Review the policy details carefully before purchasing. Pay attention to the occurrences listed explicitly in the policy, as hazard insurance typically only covers these specified events. Ensure the policy covers disasters relevant to your area.

By following these steps, you can make an informed decision when purchasing hazard insurance to protect your home and finances.

Frequently asked questions