There’s a good chance you probably hear a lot of confusing terms as you search for a new home. And there is no need to panic since you’re not alone. Actually, one topic many new home buyers struggle with is the difference between hazard insurance and home insurance. You might wonder if hazard insurance is a part of homeowners insurance.
Well, hazard insurance simply refers to coverage for the structure of your home only. Other coverages within a standard homeowners insurance policy will help pay for different kinds of damage. It is worth noting that hazard insurance doesn’t help pay for injuries that happen to you or your guests after an accident.
One of the key reasons hazard insurance is a common term is actually because of mortgage lenders. Your mortgage lender may need hazard insurance at minimum before they issue you a loan. After all, that’s the only portion of the homeowners insurance policy directly related to the structure of your house itself.
This, in turn, has the potential to create the misconception that you can take up hazard coverage separately from homeowners insurance, which is not true. In the event that your lender has already specified that you need hazard or dwelling coverage, just know that generally buying a homeowners policy will satisfy their requirements.
Hazard insurance can also help cover risks like: fire, wind, hail, theft, vandalism and explosions. As a homeowner, you probably think this won’t happen to you. But you’d be surprised to learn that property damage represent a large percentage of homeowners claims.
Keep in mind hazard insurance doesn’t cover damages caused by floods. In this case, you will be required to purchase a separate insurance policy to stay protected in these situations. Hazard insurance also doesn’t offer protection against earthquakes, but you can add coverage as an optional endorsement to your homeowners insurance policy.
As we conclude, you need to remember that there are three types of homeowners insurance coverages that help protect your home’s structure and personal belongings from covered hazards. These coverages, which are all part of a basic home insurance policy, include; dwelling coverage, other structures coverage, and personal property coverage.
Remember, your hazard/homeowners coverages are bundled for a reason. After all, they work together to protect you. Either way, be sure to do your homework before you finally take up hazard insurance for your home.
