Buying a new home can sometimes be overwhelming with all the “buzz” words and checklists. Have you ever wondered what exactly hazard insurance and why you need it? Here is some information to help explain it so you’re prepared when it comes time for insurance on your new home.
What is hazard insurance?
Hazard insurance and homeowners insurance are not separate coverage types. Hazard insurance generally refers to coverage for the structure of your home only. It may cover “hazards” such as fire damage, hail damage, theft, vandalism, and more. Other kinds of damage will be covered by other coverages within your home insurance policy. Hazard insurance doesn’t generally refer to the coverage that protects you for injuries incurred by you or your guests following an accident may be covered by liability coverage.
The reason ‘hazard insurance’ is a common term is actually because of lenders. Your mortgage loan provider may require hazard insurance at minimum before they will issue you a loan, because that is the only portion of the homeowners insurance policy directly related to the home structure itself. This may create the misconception that hazard coverage can be purchased separately from homeowners insurance, which is generally not accurate. If your lender has specified that you need hazard or dwelling coverage, just know that generally purchasing a homeowners policy will satisfy their requirements.
Is hazard insurance the same as homeowners?
In order to get a mortgage loan for your new home, you need to have a certain amount of hazard insurance included in your home insurance coverage. Hazard insurance is part of a homeowners insurance policy - it is not a separate coverage type.
How much is hazard insurance?
How much you pay for homeowners insurance depend on a variety of factors, including the value of your home, your policy limits and your deductible amount. It’s hard for us to give you an estimate so be sure to ask your insurance agent for details.
For maximum protection against the unexpected, a reliable homeowners insurance policy is the way to go. Some insurance companies can customizable policies for you so you can add optional coverages like flood insurance or even personal umbrella insurance.