The difference between hazard insurance and home insurance is straightforward. Hazard insurance is a subsection of a larger home insurance policy. This means if a homeowner has home insurance, they already have hazard insurance.
What is hazard insurance?
Hazard insurance is the same as the dwelling portion of a homeowner’s standard home insurance policy. It is a basic coverage that protects the structure of a home, which includes the walls, roof, foundation, ceilings and built-ins like kitchen cabinets and plumbing.
There are numerous perils, or hazards, that can damage the structure of a home. Hazards that are not typically covered by hazard insurance include floods and earthquakes. You need a separate insurance policy for those.
Here are some perils that are covered by hazard insurance:
- Fire and smoke
- Hail and sleet
- Rainstorms
- Fallen trees
- Weight of ice and snow
- Vandalism
- Wind
- Lightning
- Vehicles
- Riots
- Explosions (e.g., from gas leaks)
- Structural damage caused by theft
How is hazard insurance different from home insurance?
Hazard insurance does not cover the following coverages:
Personal Property
Covers the cost of personal property damage or theft. Applies to personal belongings inside and outside of the home, such as furniture, televisions, computers and some jewelry.
Additional Living Expenses (or Loss of Use)
Pays for lodging, restaurant meals and other related costs if a homeowner needs to vacate their home due to severe damage.
Liability
If a guest is injured on the homeowner’s property, liability coverage may help pay for any legal expenses and medical bills. The homeowner must be legally responsible for liability insurance to apply.
How much does hazard insurance cost?
Since hazard insurance is part of a homeowners policy, it is hard to identify a single average cost for hazard insurance. Factors that affect the cost of homeowners insurance include weather exposure, the size and age of the home, and the number of claims the homeowner has filed.
Do you need hazard insurance?
Yes, if you have a home, you definitely need hazard insurance. There are two main reasons:
- Mortgage lenders usually require proof that you have a certain amount of hazard insurance before issuing a loan. Because hazard insurance is part of your overall home insurance policy, just purchasing reliable home insurance should satisfy their requirements.
- As unlikely as disasters are, they can and do happen. Whether a vehicle drives into your home or a tree falls on your roof, you want the structure of your home to be protected at all times. Every lender and location has different requirements.