how hazard insurance works
hazard coverage is usually a subsection of a homeowners insurance policy that protects the main dwelling and other nearby structures such as a garage hazard insurance financially protects a property owner against physical damage to the property structures caused by sudden perils 1the events that can damage your home and surrounding structures that are covered by hazard insurance include to be prepared for every contingency homeowners should be sure that specific common hazards are covered in their insurance policy package some hazard insurance policies also cover theft and vandalism 3the amount of hazard insurance required depends on what it would cost to replace the home in the event of a total loss this dollar amount may differ significantly from the property s current real estate market value policies are typically written for one year and are renewable hazard insurance is not usually sold as a stand alone policy but is instead included in a comprehensive homeowners policy since it doesn t cover all types of risk such as liability 4typically hazard insurance only covers your home s structure roof and foundation though some policies extend coverage to include furnishings and personal belongings homeowners can often elect to beef up the hazard coverage of their policy it is much better to pay the upfront costs of extra insurance than to deal with the associated expenses out of pocket as severe weather events become more commonplace across north america due to climate change increased hazard insurance may become necessary for more homeowners 5hazard insurance is often considered synonymous with catastrophe insurance although both deal with coverage for large scale natural disasters they are technically different within the insurance industry hazard insurance refers to a portion of a general homeowners insurance policy that protects the structure of the home catastrophe insurance usually refers to a separate freestanding policy that covers specific types of disasters including man made ones 1hazard insurance and mortgagesif you have or are taking out a mortgage on your home it s common for your lender to require you to carry homeowners insurance strictly speaking what they want you to have is in fact hazard coverage since it is the portion of homeowners insurance directly related to the home structure itself as opposed to personal liability loss of use or personal property coverage usually purchasing a general homeowners policy will satisfy the lender s requirement though the level of protection required will depend on the laws of the local municipality and other special considerations if you have a very expensive property in a high risk area the lender may require additional coverage separate hazard insurance policiesin some areas certain natural or weather related activity is excluded from the hazard coverage of homeowners insurance usually because the area is so prone to these events and it s too costly for the insurance issuer to include them in a standard policy for example a florida beachfront property can be susceptible to hurricanes and tropical storms california properties located close to fault lines face earthquake threats 6homeowners living in high risk areas often need a separate hazard insurance policy to adequately protect their property such as flood insurance they might also need a policy that protects the property against landslides since conventional homeowners insurance s hazard coverage rarely covers landslides 7frequently asked questions faqs 