Hazard Insurance For Homeowners: What You Need To Know

When owning a home, the idea of your property being damaged can be a very scary thing. Luckily, your homeowners insurance policy includes hazard insurance. Between your homeowners insurance, hazard insurance and any other types of insurance you may choose to add, your home should hopefully be covered in case of any damage or emergency. So, what is hazard insurance?

What Is Hazard Insurance And How Does It Work? 

Hazard insurance can help keep your family and belongings protected. It’s the part of your policy which covers certain risks – like fires, theft and falling trees or other objects – and pays the property owner for damages to their home or sometimes even nearby structures, like garden sheds or detached garages.

Hazard insurance is a part of your homeowners insurance policy that covers damage to your home’s physical structure, including the foundation. Typically, it does not cover personal injuries or damage to the home’s interior.

What Hazard Insurance Covers

Hazard insurance coverage varies depending on the homeowner’s specific policy, so make sure you read through potential policies and speak with your insurance agent to know exactly what coverage you’ll have. In general, hazard insurance only covers items specifically listed in the policy. Items typically covered under hazard insurance include:

• Smoke or fire damage
• Snow or ice accumulation
• Impact of fallen trees or other objects
• Hail
• Wind damage
• Theft
• Vandalism
• Explosions
• Faulty appliances or pipes

Depending on where you live, you might also need to purchase extra types of coverage to protect against specific events. For instance, you may need to buy an additional policy if your home is in a flood zone or earthquake-prone area.

Damage Not Covered By Hazard Insurance

Interior damage and injuries to people in the home aren’t typically covered under hazard insurance, though they may be covered under different parts of a homeowners insurance policy. Mold, flood damage and earthquake damage are not covered either, but can be purchased separately.

Filing A Hazard Insurance Claim

If your home or property is damaged, you’ll typically have a set period of time to contact your insurance company and file a claim. This period will vary between providers, but most companies allow you to file a claim up to a year after the incident.

Before filing an insurance claim, there are a few steps you should take to make sure filing a claim is the right move.

• Review your policy: It’s a good idea to have a clear understanding of what your policy covers so there won’t be any surprises.
• Take note of your deductible: Check your deductible and decide if filing a claim is worth it. Financially, you might want to withhold from filing a claim if your losses don’t significantly exceed your policy’s deductible. If the damage is less than your deductible, you won’t recover any of that money from your insurer, but the claim goes on your record and may put you at a higher rate.
• Self-assess your damages: 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.
• Fill out paperwork: The next step is to fill out the 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.
• Find out if your claim is approved. If 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. If your claim is denied, you may be able to dispute the decision.

Other Insurance Types You May Want To Purchase

Owning a home comes with many pros and cons, and the risk of damage is fairly high on the list. But, homeowners insurance can help mitigate the risk. Investigate options for other important insurance types, such as insurance for damage from natural disasters like flooding.

Hazard Insurance FAQs

Here are a few more frequently asked questions about hazard insurance and how it works:

What’s the difference between hazard insurance and catastrophe insurance?

Hazard insurance refers to a section of the homeowner’s policy that covers structural damage to the home, while catastrophe insurance refers to stand-alone policies. 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 tornadoes – while hazard insurance can protect against more individual and nonnatural risks like vandalism and theft.

How much hazard insurance do I need?

Generally, your insurance should be enough to cover the cost of full reconstruction, should you need it.

Can I remove hazard insurance from my mortgage?

Once you’ve paid a specific amount of your mortgage, you may be able to remove your hazard insurance. You’ll need to contact your lender to find out what your specific qualifications are.

Do I need hazard insurance?

Qualifying for a mortgage usually requires you to have a certain amount of hazard insurance under your homeowners insurance policy. 

The Bottom Line: Hazard Insurance Protects Your Home From Serious Risk

Hazard insurance can help you save money if your property is damaged due to certain circumstances. It’s a great option to have in case of an emergency but be sure you know all about your specific policy so you can decide when and when not to use it. If you need additional help paying for home improvements in the wake of a significant catastrophe and are worried you won’t pass the appraisal needed for a cash-out refinance, you still have options with Rocket Loans^SM.