Is Hazard Insurance the Same as Homeowners Insurance?

No, hazard insurance is a component of your homeowners policy. Traditionally, the main purpose of homeowners insurance is to help you repair or replace your home and personal property if it is damaged due to certain perils. The perils that homeowners insurance covers are hazard insurance. 

Key takeaways

• Homeowners insurance is a home insurance policy that includes hazard insurance within it. 
• Hazard insurance is the list of perils typical homeowners insurance policies cover.
• Your homeowners insurance may cover hazards on an open or named peril basis.
• It’s important to understand the differing coverage options and perils covered under homeowners policies in order to choose the best for you.

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

Homeowners insurance provides coverage for losses that may arise out of the experience of homeownership. Most commonly, it provides coverage for damage to your home caused by certain perils or hazards.

Hazard insurance is not an insurance policy at all. It is a term used, mostly in the lending industry, to describe the perils covered in a homeowners policy. 

What is homeowners insurance?

Homeowners insurance is property insurance you apply for on the home you live in. In addition to covering damage or loss to your property, homeowners insurance also provides liability coverage for you if an accident causes injury or property damage to another person. Mortgage lenders typically require owner-occupied properties to have homeowners insurance. 

There are many types of homeowners insurance policies, ranging from HO-1 to HO-8. Each policy provides different levels of additional coverage and protection for different property types. If your home is a condominium, for example, you’ll most likely acquire HO-6 condo insurance. If you live in a single-family residence, then you’ll want to explore an HO-3 homeowners insurance policy.

What is hazard insurance?

Hazard insurance are the perils your homeowners insurance covers. Your homeowners policy will cover repair or replacement costs of your home, other structures, and belongings if damaged by these perils. For instance, if a fire destroys your home, you could file a claim with your insurance company for payment to rebuild your home.

What does hazard insurance cover?

There is no separate policy for hazard insurance. Hazard insurance is embedded in your homeowners policy on a named or open peril basis. 

Named perils policies protect your home from explicitly listed perils which may include:

• Fire and lightning
• Windstorm and hail
• Explosion
• Riot or civil commotion
• Damage caused by an aircraft
• Damage caused by vehicles
• Smoke
• Volcanic eruption
• Vandalism and malicious mischief
• Theft
• Falling objects
• Weight of snow, ice, or sleet
• Accidental discharge/overflow of water
• Sudden tearing/cracking of appliances
• Freezing
• Power surges

Open peril policies protect your home from all perils except specifically listed exclusions. Typically exclusions on an open peril policy include: 

• Earth movement
• Ordinance of law
• Certain types of water damage
• Power failure
• Neglect
• War
• Nuclear hazard
• Intentional loss
• Government action
• Home-based businesses
• Pest damage and removal

Homeowners insurance coverages

There are six primary coverages that make up a standard homeowners insurance policy. Every coverage has its own liability limit. 

• Dwelling coverage: This includes the cost of any damage to your home or connected establishments.
• Other structures coverage: This policy covers damages to detached structures on your property, like a shed, garage, fence, or in-ground swimming pool.
• Personal property coverage: This covers personal property from any damage or theft and may apply to losses that happen on and off your property.
• Loss of use coverage: This covers temporary lodging, meals at restaurants, expenses related to moving, and other costs when your house is being fixed up after a covered loss.
• Personal liability coverage: This liability insurance protects you from costly lawsuits if someone gets injured on your property or you cause property damage or bodily injury to someone else. 
• Medical payments coverage: This may cover guests’ medical expenses if they hurt themselves on your property, no matter who’s at fault. 

How do I choose the right Homeowners insurance product?

As we have seen, there are several homeowners policies that include different types of hazard insurance. When selecting a homeowners policy, you must first make sure you are getting the right policy for your exposure. For example, you should not purchase an HO-6 condominium policy if you own a single-family residence or purchase landlord coverage if you own and reside in the home you’re insuring.

Once you have identified the appropriate product, you can compare these products by the breadth of coverage and services provided. Different products may provide coverage against a broader array of perils. Some products provide other services such as mitigation devices and advice. These value-added services may help you avoid loss in the first place and, therefore, never need to experience the inconvenience of a loss.

How much does hazard insurance cost?

There are a handful of factors that affect the cost of a home insurance policy, including your home’s location and your personal credit score. The cost of hazard insurance is included in the overall cost of your homeowners insurance policy and will also be affected by the limits and deductibles you choose.

The average cost of homeowners insurance varies by state since different areas come with different risks. As a result, your location can significantly impact how much the hazard insurance coverage affects your home insurance policy price. You may be at greater risk of natural disasters if you live near a flood zone or an earthquake zone, for example. And in some cases, your hazard insurance coverage may not cover these perils. 

Want more information? Get a quote on homeowners insurance in under a minute, or give us a call to ask questions. 

Still have questions?

Is hazard insurance included in homeowners insurance?

Yes, hazard insurance is a component of homeowners insurance policies. It is a list of perils covered by your homeowners insurance policy.

Is hazard insurance the same as private mortgage insurance (PMI)?

Hazard insurance and PMI are two different types of insurance. Hazard insurance covers your property in case of damage from a covered peril. PMI is insurance that covers your mortgage if you can’t make the payments.

Why did my homeowners insurance price increase?

There are several reasons why hazard insurance premiums might go up, even if you haven’t had any claims. The first reason is that the cost to repair or replace your home increases every year. Therefore, your homeowners insurer will likely increase your coverage limit to ensure you are properly insured if you experience a loss. This will, in turn, likely increase the amount you pay for insurance. Second, insurers may change the price they charge for insurance. This may result in an increase or a decrease based upon their experience. 

Is homeowners insurance mandatory on a mortgage?

Most mortgage lenders will require you to maintain homeowners insurance so they are protected if the home is destroyed. If you do not have a mortgage, homeowners insurance may not be mandatory, but it still is a good idea to protect your investment. 

How can you purchase homeowners insurance?

You can get homeowners insurance through an independent or captive agent, directly through an insurance company, or through other relationships such as via a lender or home builder. 

How do I choose a homeowners insurance policy?

You can choose a suitable homeowners policy by looking at a policy that offers you the best value for money. Low premiums do not necessarily translate to the best policy. It would help to compare quotes from companies, study coverage options, and ask for advice from experienced insurance agents. The ideal insurance policy is one that offers sufficient coverage at reasonable premiums.