What Is Hazard Insurance?

Fran Majidi
June 18, 2020

People wonder if hazard insurance is the same as homeowners insurance. The answer is, well, sort of. When you’re told you need to buy hazard insurance, shop for homeowners insurance. In order to get a mortgage on a home, you need homeowners insurance but your lender may just tell you that you ought to buy hazard insurance. It’s a matter of different wording. 

In your home insurance policy, there needs to be a section called hazard insurance included in the coverage. So, hazard insurance is part of your homeowners insurance. It is a necessary protection to have when you own a home, even if you’ve paid off your mortgage. Here are some more answers about hazard insurance and your homeowners insurance policy.

What Is Hazard Insurance

The hazard section, sometimes called dwelling coverage, refers to the structure of the home. This is different from the liability section of your homeowners insurance, which would cover injuries, slander and other things that sometimes escalate to legal battles. Hazard insurance covers damages to the home. 

Most home lenders require hazard insurance at minimum, in order to protect their asset. This is the only portion of your homeowners insurance policy that covers the house itself. The structure of the home is the most expensive to rebuild and it’s always calculated separately. That is why when you declare a home value, they say to consider what it would cost to rebuild the home, not what it’s worth on the market.

Hazard insurance covers the typical perils you’d think of, such as fire, storm damage, theft, vandalism, fallen trees, explosions, riots and civil commotion, overflow of water or stream, falling objects, freezing of systems like heat and AC, weight of ice and snow and other types of incidents that would damage the structure of a home. 

What Doesn’t Hazard Insurance Cover?

Hazard insurance should also come with a liability portion in your homeowners insurance. Liability is what will protect you if someone is hurt in your home, if your dog bites someone or if you’re sued for slander or any wrongdoing.

Hazard insurance does not cover all types of damage to a home’s structure however. If your home is damaged after an earthquake, for instance, your hazard coverage won’t pay you to fix it. You’ll need earthquake insurance for that, and that is sold separately from a standard home insurance policy. 

You also won’t be covered by hazard insurance if your home gets flooded after a terrible storm. Flood insurance is another product that is sold separately. Home insurers are very particular about the types of water damage they cover. 

How Much Does Hazard Insurance Cost?

There are many factors that determine the cost of your homeowners insurance. As it relates to the hazard portion of your policy, there is a lot of weight on the age of the home and the type of structure the home is. There are also security and safety features that determine what type of risk the home will be exposed to and if there are preventative measures in place to prevent severe damage. 

Older homes are more expensive to insure because they are usually not built to local codes. Also, the materials your home is made with determines how flammable it is. For instance, brick or stone are sturdier than wood. Roof type is also important because it’s the most commonly damaged part of the home’s structure. It is also one that is often left to neglect. If you’re not maintaining your roof as it ages, do not expect homeowners insurance to pay for a replacement. If a claim is filed, the roof will be closely inspected to determine how much of the damage, if any, the insurer is willing to pay for.

The location of your home also impacts the cost of hazard insurance because certain areas are prone to disasters while others are not. Also being located close to a police station or fire station will reduce the cost of your hazard insurance. If your neighborhood gets burglarized and vandalized often, you’ll have a higher rate.

Of course personal information on you will matter too, like credit history, whether or not you’ve had gaps in coverage. These determine how responsible you are. Responsible people are seen as lower risk homeowners. If you’ve filed many claims in the past, it will count against you too. It may even prevent an insurer from offering you coverage. That’s why it’s important to only make a claim against your homeowners insurance for big fixes that are covered in your policy. 

There’s also a deductible to pay, so it isn’t worthwhile to file small claims that you can pay for yourself. 

What Else Does Homeowners Insurance Cover?

  • Other Structures. Your garage and shed, fence, deck or any other structure on your property may be covered in your policy.

  • Personal Property. This coverage protects your personal belongings inside and outside the home. For instance, your stolen bicycle may be claimed.

  • Loss of Use. If you can’t live in your home for any reason, due to a covered event like a house fire, your living costs may be covered.

  • Personal Liability. As mentioned earlier in the article, you’re covered if someone is injured on your property.

  • Medical Payments. This pays for guests’ medical expenses if they are injured on your property. 

Remember: You Have a Deductible!

Just as you do with auto insurance, you have a deductible on your homeowners insurance policy. What that means is that after you file a claim, you’re covered only after you pay that portion of the bill. Deductibles for home insurance range from homeowner to homeowner, but generally do not dip lower than $500. If you want to read more about homeowners insurance deductibles and how to choose the right one, visit here.

If you have questions about your dwelling insurance or want to see if you qualify for a lower homeowners insurance rate, fill out our form here so we can pair you up with the right agent.

Get a Free Home Insurance Quote Online Now.

Related Articles

Home Insurance 32 New Year's Resolutions for a Fiscally Smart 2021

At the top of the list, is reviewing insurance policies. Are you getting the coverage you need at the price you want? If not, it may be time to change policies. Need a different price? Shop around for better offers.

Home Insurance How to Clean Your Gutters and Why it's Important to Keep them Clean

Gutters and downspouts work to navigate water flow off the roof so that there is no standing water that can lead to complications such as rotting wood, rotting fascia and foundation cracks

Looking for Home Insurance?

Compare rates from dozens of companies in less than 3 minutes.