When shopping for a homeowner’s insurance policy, it’s easy to get confused. There are so many terms specific to the industry and it can be hard to keep them straight as you shop. This is often the case with hazard insurance, a kind of coverage that you may already hold as part of your homeowner’s insurance policy.
What is Hazard Insurance?
Hazard insurance is included as part of the typical homeowner’s insurance policy. It is the portion of the policy that covers damage to your home’s structure. The hazard referred to in this type of coverage is the actual event or thing that causes the damage, like fire, flood, wind, smoke or hurricane. These hazards will be named and explained in detail in the policy documents, so it is important to take the time to read them over before you sign on with any insurer. In many states, home insurance does not cover natural disasters like flooding or earthquakes. You can seek out extra insurance for these specific hazards if you live in a part of the country where there is a real risk of a natural disaster happening.
These documents will also name any items that are not covered by the policy, like fine jewelry or business-related equipment you may be storing at home. If you do keep these kinds of items in the home on a regular basis, you may need to purchase additional insurance coverage to keep them insured.
Benefits of Hazard Insurance
Hazard insurance keeps the structure and contents of the home protected against these damages, while the other portions of home insurance policies cover the other situations that might result in a claim. These include things like personal liability, which comes into play if another person is hurt on your property.
The reason hazard insurance is significant is often because of the mortgage lender and their requirements. To approve a mortgage, most lenders want to see proof of hazard coverage on the property. They are typically not concerned with the other kinds of coverage your homeowner’s insurance policy carries.
While some new buyers try to get hazard insurance on its own to save a few dollars, this is typically not offered by insurance agents. To get hazard insurance you will likely have to purchase a homeowner’s insurance policy, which will satisfy the requirements of any lender. It will also protect you in many different situations that happen every day in the average home.