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What Is Hazard Insurance And How Does It Protect Your Home?

Holly Shuffett4-Minute Read
October 27, 2020

While dramatic house fires or burglaries are abundant as plot points in our favorite TV shows and movies, you certainly wouldn’t want to be met with the financial and emotional challenges that come with a real-life disaster. That’s where hazard insurance can play an important role in keeping your family and belongings protected and cared for

What Is Hazard Insurance?

Although hazard insurance is not its own entity, but rather a portion of your homeowners insurance policy, many lenders will still be eager that you have it. Hazard insurance is the part of your policy which covers certain risks – like fires, theft and vandalism – and compensates the property owner for damages to their home or even nearby structures, like garden sheds or detached garages.

How Does Hazard Insurance Work?

Typically, hazard insurance covers perils caused by:

  • Smoke or fire
  • Wind
  • Hail
  • Lightning
  • Theft
  • Vandalism
  • Falling trees or objects
  • Explosions
  • Snow or ice volume
  • Civil disturbances or riots
  • Faulty appliances or pipes 

Although protection against some of these risks may be included in your policy, which covers personal liability, loss of use, or personal property, it’s hazard insurance which covers the costs of structural damage – meaning, your home’s foundation, walls, roof, and any aforementioned accessory buildings.   

How Does The Hazard Insurance Claims Process Work?

Following an event which has damaged your home or property, you’ll typically have a set period of time to contact your insurance company and file your claim. Although this period varies among insurance providers, for most companies you’ll have a year from the time of the incident – but a general rule of thumb is the sooner you file your claim, the better, especially if your damage is due to a natural disaster which has affected many.

However, before filing your insurance claim you should review your policy to see if you need to file one in the first place. Financially, you might want to withhold from filing a claim if your losses don’t significantly exceed your policy’s deductible. It’s also just a good idea to have a clear understanding of what your policy covers, so that you won’t be taken by surprise.

Depending on your insurance provider, you will then either self-assess your home or the company will have an adjuster come out to inspect the damage and generate an estimate for the cost of repairs. The next step is paperwork: filling out your claim forms. This might also include submitting video or photo evidence, and it’s usually a good idea to include as many details as possible which can help speed things along.

Once your claim is approved, you’ll receive your insurance reimbursement. If you have a mortgage on your home, your lender will also have access to their portion of the reimbursement funds.

Are There Things Hazard Insurance Doesn’t Cover?

Since hazard insurance is essentially an add-on to your standard homeowners insurance, it will only cover the cost of damages for the specific risks that you have outlined in your insurance policy. Additionally, hazard insurance generally doesn’t cover hurricane or earthquake damages either – for that kind of coverage you’ll want to purchase separate protection policies.

What Additional Insurance Coverage Will I Need?

If your property is located in a high-risk area for certain natural disasters, you will need to purchase more extensive, and costly, coverage in the form of a stand-alone policy. For those who are located on the West Coast, you’ll want to consider obtaining earthquake insurance, and if you think your property is at risk of flooding, you’ll need to purchase a stand-alone flood insurance policy.

How Much Does Hazard Insurance Cost?

The cost of hazard insurance isn’t cut and dry due to a variety of factors:

  • Your home’s age and value
  • Your policy’s deductibles and limits
  • The types of coverage in your policy

Additionally, policy premiums are typically paid annually for the upcoming year, and rates per year can vary depending on events, like increasingly frequent or severe storms.

Hazard Insurance FAQs

What’s The Difference Between Hazard And Catastrophe Insurance?

Although many use these terms interchangeably, within the insurance industry, hazard insurance refers to the section of the homeowner’s policy that covers structural damage to the home, while catastrophe insurance refers to stand-alone policies.

Additionally, hazard insurance can include protections against risks not covered by catastrophe insurance. In most cases, catastrophe insurance only protects against large-scale disasters – usually caused by natural events, like hurricanes or tornados – while hazard insurance can protect against more individual and non-natural risks like vandalism and theft.

How Much Hazard Insurance Do I Need?

Since hazard insurance protects the structure of your home, a good rule of thumb is that your insurance should be enough to cover the cost of full reconstruction, should you need it.

Where Can I Purchase Hazard Insurance?

Any insurance broker who sells homeowner policies should be able to help you get hazard insurance or any other protection you may be interested in.

Summary: Protect Your Home From Risks Large And Small

All in all, hazard insurance is a way to provide the extra protection for the structure of your home and property that standard homeowner policies may not provide. It can protect you against unique and specific risks and will vary in cost depending on your home and current insurance policy.

If you’re interested in learning more ways to care for your home, check out our Homeowner Guide for more homeownership tips and tricks.

Get the right home loan for you.

Holly Shuffett

Holly Shuffett is a freelance writer for Rock Companies where she usually covers lifestyle and personal finance topics. Holly is also an Oakland University senior pursuing public relations and journalism, and she is interested in learning more about the entertainment and travel industries. In her free time, Holly serves as the secretary for Dance Marathon at OU, is a member of PRSSA, and tutors part time for Dictionary.com.