Hazard vs. Home Insurance

Homeowners are often curious about hazard insurance and home insurance, and whether they’re the same thing. At the same time, they’re curious about what hazard insurance covers so they know just when to use it if they have to make a claim.

What is Hazard Insurance?

Home insurance is the broad term for all types of insurance that apply to that home, and hazard insurance happens to fall under that umbrella! Hazard insurance usually applies to the physical structure of your home and other structures (like pools and gazebos) on your property. In the event these structures are damaged by certain “hazards” like fire, hail, theft, or vandalism, your hazard insurance kicks in! However, there are some common exclusions to be aware of. Hazard insurance doesn’t usually cover damage from earthquakes, floods, war, gradual wear and tear, or sewer backups.

Is Hazard Insurance Required?

This is where things really get interesting, and it also explains where the confusion about hazard vs. home insurance comes from. Most of the time, when you apply for a mortgage, the lender requires that you have home insurance, even though it’s not legally required by the government. Often, lenders list this requirement as “hazard insurance,” which is why many homeowners assume it’s different than home insurance, when in fact, it’s just a type of home insurance. If you’re buying a home without a mortgage, home insurance is still a very good idea, because many home insurance claims cover bills in the hundreds of thousands.

Is Hazard Insurance the Only Kind of Insurance I Need?

While your hazard insurance helps cover the cost of physical damages to the structure of your home, the other components of a home insurance policy are also important. Hazard insurance usually falls under “dwelling coverage,” while personal property protection insures your belongings if they’re stolen or damaged, and personal liability coverage helps with legal fees and medical costs if someone is accidentally injured on your property.