If you have ever applied for a mortgage then you may have heard the term hazard insurance.
At every point of the mortgage process, you’ll receive demands from your lender which you must meet before you receive the loan. Most times, one of these demands is that you buy a hazard insurance policy.
As is suggested by the name, this coverage is set up as protection for your new property against a lot of possible hazards. Seeing as the brunt of the weight of the risk on your property is borne by your lender, they want to make sure they protect their investment from harm and destruction. This is why a hazard policy is needed.
Here in Portland Indiana, we are experts on home and hazard insurance coverage options and in today’s post will share some more info on the subject matter.
If you have any questions about your home insurance or would like for us to compare your coverage options and provide you with a hassle-free quote then get started comparing rates.
Coverages Provided by Hazard Insurance
With a hazard insurance policy, your home would be protected from some kinds of risks and you can have access to having repairs, rebuilding or replacement done when the property needs any of these services.
This entails protecting the following:
- The property’s structure
- Garages, sheds or the structures attached to the home
- Any personal property in the home in case any of them are ruined or destroyed by an occurrence that is included in the coverage.
The home’s interior and exterior are also included in the coverage. Hence, if the roof is damaged by a hailstorm that makes the roof leak which in turn damages the drywall in your living room, the hazard policy will most likely cover the damages.
Your hazard insurance coverage may include the following situations:
- Damages done by fire and smoke
- Wind and/or hail
- Power surges or lightning strikes
- Rioting or civil unrest
- Theft or vandalism
- Water damage (here, flooding caused by the weather is not included. The damage referred to is that caused by a damaged pipe or faulty appliance)
Ensure that you take a look at the fine print on your policy to find out what is included in the coverage offered by your insurer.
Things Not Covered by Hazard Insurance
Although your coverage includes your property and everything in it, you don’t have hazard insurance protection from everything.
For example, your protection does not include bedbugs or termite infestations. If you don’t live in certain states, your coverage does not include protection from sinkholes or landslides (even in those states, you’ll have to pick the optional coverage when paying for coverage).
Most states do not include floods and earthquakes in their standard hazard insurance policies. You have to pay for extra coverage if you want protection from natural disasters such as those.
If you live along the Gulf or the Atlantic, you won’t have protection from damages done by hurricanes if you do not purchase additional coverage. Even if you have coverage and you get approval for your claim, a higher fee which is most often very high may be required of you to cover damages caused by those events.
Some other situations such as mold are also not covered by insurers except if there’s a direct cause which is covered like water damage.
Do Hazard Insurance and Homeowners Insurance mean the same thing?
If you pay for the homeowners insurance which is also known as HO3 policy, you’ll have automatic hazard insurance coverage. The reason is that hazard insurance is a subcategory of homeowners insurance. Thus, it’s an important part of your entire homeowners policy.
While your property and its surrounding structures are covered by hazard insurance, the following are included in homeowners insurance:
- Coverage of your home and other surrounding structures
- Coverage of your personal property even when not in proximity to your home (like having your car vandalized at the mall).
- Personal liability coverage (if someone sustains an injury in your home).
- Loss-of-use coverage which affords you certain living expenses if you can no longer live in your home due to an event that is included in the coverage.
It is always good to understand your insurance policies and coverages.
Many homeowners purchase home insurance because it is required by their lender but not every homeowner takes the time to shop their coverage options.
We have been helping residents in and around Portland Indiana for decades with their homeowners insurance and hazard insurance policies.
If you have any questions about your home insurance or would like for us to compare your coverage options and provide you with a hassle-free quote then use our quick and simple rate comparison form.