{"id":5114,"date":"2023-11-07T18:00:00","date_gmt":"2023-11-07T18:00:00","guid":{"rendered":"https:\/\/businessyield.com\/ins\/?p=5114"},"modified":"2023-11-06T19:16:26","modified_gmt":"2023-11-06T19:16:26","slug":"home-hazard-insurance-what-is-it-how-does-it-work","status":"publish","type":"post","link":"https:\/\/businessyield.com\/ins\/home-insurance\/home-hazard-insurance-what-is-it-how-does-it-work\/","title":{"rendered":"Home Hazard Insurance: What Is It & How Does It Work?"},"content":{"rendered":"

In general, home hazard insurance is often considered synonymous with catastrophe insurance. However, while both deal with coverage for large-scale, natural disasters, they are technically different. <\/p>

Hazard insurance, within the insurance industry, refers to a portion of a general homeowners insurance policy that protects the structure of the home. Catastrophe insurance, on the other hand, usually refers to a separate, freestanding policy that covers specific types of disaster, including man-made ones.<\/p>

Home hazard insurance protects a property owner against damage caused by fires, severe storms, hail\/sleet, or other natural events. As long as the specific weather event is covered within the policy, the property owner will receive compensation to cover the cost of any damage incurred. <\/p>

Typically, the property owner will be required to pay for their premiums with an escrow account, but this practice will depend on the exact details of the policy.<\/p>

How home hazard insurance works<\/strong><\/span><\/h2>

Home hazard insurance generally refers to the coverage of the structure, roof, and foundation of your home only. However, in some policies, it can be extended to furnishings and personal belongings, as well. It protects a property owner against damage caused by fires; lightning; hail-, wind-, snow-, or rainstorms; or other natural events. <\/p>

Hazard coverage is usually a subsection of a homeowners insurance policy that protects the main dwelling and other nearby structures, such as a garage. To be prepared for every contingency, homeowners should be sure that specific, common hazards are covered in their insurance policy package.<\/p>

The 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 value in the current real estate market. Policies are typically written for one year and are renewable.<\/p>

Hazard insurance and Mortgages<\/strong><\/span><\/h3>

If 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 the homeowners’ insurance directly related to the home structure itself (as opposed to personal liability, loss of use, or personal property coverage).<\/p>

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.<\/p>

Separate hazard insurance policies<\/strong><\/span><\/h2>

In some areas, certain natural or weather-related activity is excluded from the hazard coverage of homeowners insurance\u2014usually 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. <\/p>

For example, a Florida beachfront property can be susceptible to hurricanes and tropical storms; California properties located close to fault lines face earthquake threats.<\/p>

If homeowners live in a high-risk area, they often need a separate hazard insurance policy to adequately protect their property. This can be a flood insurance policy, or a policy that protects property against landslides (such movements of the earth are rarely covered by conventional homeowners insurance’s hazard coverage).<\/p>

What does home hazard insurance cover?<\/strong><\/h2>

Here are the hazards (perils) commonly covered by hazard insurance:<\/p>

  1. Fire and lightning<\/li>\n\n
  2. Smoke<\/li>\n\n
  3. Volcanic eruption<\/li>\n\n
  4. Theft<\/li>\n\n
  5. Windstorm and hail<\/li>\n\n
  6. Explosion<\/li>\n\n
  7. Weight of ice and snow<\/li>\n\n
  8. Riots<\/li>\n\n
  9. Vehicles<\/li>\n\n
  10. Aircraft<\/li>\n\n
  11. Vandalism<\/li>\n\n
  12. Falling objects<\/li>\n\n
  13. Freezing of household appliances or heating, plumbing, air conditioning systems or sprinkler systems that put out fires<\/li>\n\n
  14. Accidental overflow of water from household appliances or heating, plumbing, air conditioning systems or sprinkler systems that put out fires<\/li>\n\n
  15. Accidental damage due to short-circuiting of an electrical current<\/li>\n\n
  16. Accidental cracking, burning, or tearing of heating, plumbing, air conditioning systems or sprinkler systems that put out fires<\/li><\/ol>

    If one of these problems damages your property, the hazard or dwelling portion of your policy will cover repair costs. In general, hazard insurance will cover only the perils that are listed in the policy. But a standard homeowners policy, called an HO-3, will cover all problems that damage your house except ones that are specifically excluded.<\/p>

    Hazard insurance requirements can differ by lender and by location. For instance, while wind damage is usually covered by homeowners insurance, in some coastal areas it may be excluded from a home insurance policy. If your hazard insurance excludes windstorm damage or your lender requires it, you will have to buy a separate windstorm policy.<\/p>

    What does home hazard insurance not cover?<\/strong><\/h2>

    There are certain things that home hazard insurance won\u2019t cover, such as:<\/p>