What Is Hazard Insurance and What Does It Cover?

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    Many people get confused by the concept of hazard insurance, and especially on how it differs from homeowners insurance. The truth is that hazard insurance differs from homeowners insurance in several key ways. Here's what you need to know when comparing coverages.

    What is hazard insurance

    In the most basic terms, hazard insurance is part of your homeowners insurance. This portion of your insurance protects your home's structure against specific perils, while your personal property insurance protects your personal belongings. 
    Most mortgage companies will require hazard insurance, but the chances are that if you already have a homeowners insurance plan, you're already good to go since the standard coverage rate is often enough for them. 
    Some perils commonly covered by hazard insurance are:
    • Fire/smoke
    • Lightning
    • Hail and windstorms
    • Theft
    • Vandalism
    • Damage from vehicles or aircraft 
    • Explosions
    • Riots 
    • Volcanic eruptions
    • Falling objects
    • Freezing of household systems (like the AC)
    • Damage resulting from an electrical current
    • Weight of ice, snow, or sleet 

    Can you get additional hazard coverage?

    While most people shouldn't worry about this, depending on where you live, your insurance company might not cover some perils. For example, if you live in a flood-prone area or an earthquake-prone area, these will most likely not be covered by your standard insurance policy since it would be too expensive for them. 
    However, you can get additional coverage to specifically cover the gap that your standard policy has. In places like Florida, it is not rare for people to have a separate flood insurance policy, for example, since that is not usually a part of the standard home insurance in the area. 

    How much will it cost?

    Hazard insurance is around 0.30% of your homeowners policy cost, and as it tends to happen when it comes to insurance, your quote will depend on many factors. Such as:
    • How old is your home
    • The materials that it is made of
    • The specific insurance plan you choose
    • The security level of your home 
    Now, if you happen to live in an area that's prone to a specific peril, it would be good to shop around for a policy that covers you against it. Most companies will allow you to add extra coverage for specific perils, usually for an additional price. 
    You can also cover the gap by purchasing a separate insurance policy specifically for the peril that you're missing in your main policy. However, this route might not only be more costly, but it also means that you will have to deal with several insurance plans and possibly multiple companies at once. Which is why for the sake of keeping things simple, when purchasing a homeowners insurance plan, make sure that it has everything you need. 

    Who should get hazard insurance?

    The short answer is everyone who owns a home. If you happen to be paying a mortgage on your house, the mortgage company will most likely make sure you're covered before they can approve you. However, even if you're not paying a mortgage, you should still make sure your house is protected. 
    A good insurance policy can make a devastating loss way more manageable, and it will let you breathe easy in your day-to-day knowing that if the worst were to happen, you and your family are covered.

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