A mandatory component of homeowners insurance, hazard insurance provides coverage for specific hazards to the physical integrity of your home. It is designed to protect your home from damage caused by a variety of natural and man-made disasters. Understanding what hazard insurance does and does not cover can help you make an informed decision about your coverage needs. This page will give you a comprehensive look at various features of hazard insurance, clarifying its scope and limitations.
1. Basic Hazard Insurance Coverage
In short, hazard insurance pays for damage to the structure of your home caused by specific hazards or risks. These are usually natural events such as fire, lightning, windstorms, hail, and vandalism. If any of the above causes damage to your home, hazard insurance covers the repair or replacement of the structure. This means protecting the walls, roof, foundation, and other physical elements of your home. In most cases, hazard insurance will also cover other structures on your property, such as garages, sheds, or fences, if they are attached to or considered part of the architecture of your home.
2. Smoke and Fire Damage
Fire and smoke damage are among the most common and largest risks that hazard insurance faces. Whether caused by lightning, an accidental kitchen fire, or something else, fires can cause serious damage to a home. Hazard insurance covers smoke damage to floors, ceilings, and walls, as well as physical damage from fire. It is therefore worth noting that damage caused by intentional fire or arson is generally not covered.
3. Hail and Wind Damage
Hazard insurance typically covers another common hazard: damage from windstorms and hail. In areas where severe thunderstorms, hurricanes, or tornadoes are common, wind damage can cause significant damage to your home. Hazard insurance pays for damage caused by high winds, including structural failures caused by flying debris, broken windows, and roof damage. Likewise, hail can severely damage windows, siding, and roofs; hazard insurance covers repairs to these surfaces.
4. Lightning Strikes and Surges
Lightning strikes are a common cause of damage to homes, especially in areas where thunderstorms are common. Hazard insurance generally covers damage caused by lightning, but it does cover fire damage and the cost of repairing appliances and electrical equipment that can be damaged by a surge caused by lightning. This type of coverage ensures that if the electrical system is damaged, the home can be restored to its original condition.
5. Vandalism and Theft
In addition to natural disasters, hazard insurance can also pay for damage caused by vandalism and theft. If someone breaks into your home or intentionally damages your property, your insurance may cover structural repairs. This includes windows, doors, walls, etc. However, personal items such as furniture, trinkets, or jewellery often fall under a different section of homeowners insurance. If you want comprehensive coverage against theft of personal property, you will also need adequate home contents insurance.
6. Damage caused by Aircraft or Vehicles
Although it may seem unlikely, homes are sometimes damaged by cars or aircraft. Insurance usually covers damage caused by an aircraft or other flying object hitting the ground or a car hitting a house. Hazard insurance covers repairs needed for any structural damage to the home, regardless of how the damage occurs. However, if the damage is caused by a vehicle or aircraft owned by the homeowner, the policy may not cover it.
7. Water Damage from Plumbing Issues
Although this is not always the case, many homeowners mistakenly believe that hazard insurance covers all forms of water damage. Hazard insurance typically covers water damage caused by incidents such as sewer problems, burst pipes, or overflowing bathtubs. However, damage caused by external sources of water, such as flooding or heavy rain, may not be covered. For example, flood insurance typically covers your home if it floods due to a storm or rising water hazard insurance does not apply;
8. Hazard Insurance Premiums
Several factors will affect the cost of hazard insurance, including the size of the home, its location, the construction materials used, and common hazards in the area. For example, when it comes to hazard insurance, properties in hurricane-prone areas will typically pay more due to the greater chance of storm damage. The age of your home, your deductible, and the coverage you choose also affect the cost. Homeowners can often lower their premiums by choosing a higher deductible, combining policies, or investing in a fire-resistant roof as a preventative measure.
Conclusion
Hazard insurance is an important part of homeownership and provides necessary protection against many potential hazards. While coverage covers losses due to fire, storms, theft, and more, it’s important to know what your policy doesn’t. Understanding your coverage and limits can help you insure your home against financial losses caused by unexpected disasters. Work with your insurance agent to tailor a policy to your needs to provide peace of mind and protection for your home and belongings, whether you need additional coverage for floods, earthquakes, or other disasters.
FAQs
1. What does hazard insurance typically cover?
Hazard insurance typically covers losses from fire, wind, hail, lightning, theft, vandalism, and damage to your car or aircraft, and is designed to protect the integrity of your home and sometimes other structures on your property, such as sheds and garages.
2. How does hazard insurance fall short?
Typically, hazard insurance does not cover damage from ordinary wear and tear, earthquakes, or floods. Such disasters require a separate plan for flood or earthquake insurance. It also excludes liability claims and personal belongings stored in the home.
3. How is homeowners insurance different from hazard insurance?
No; homeowners insurance also includes hazard coverage. Although hazard coverage is included with your homeowner’s policy, it also provides additional coverage for personal property, liability protection, and temporary living expenses if your home becomes uninhabitable.
4. Do I Still Need Hazard Insurance Without a Mortgage?
Although you are the sole owner of your home and are not legally required to have hazard insurance, it is highly recommended that you protect your property from potential damage. Without it, you are on the hook for repairs or a complete rebuild in the event of a disaster.
5. Why Do Mortgage Lenders Require Hazard Insurance?
Mortgage lenders require hazard insurance to protect their investment in your property. Since your home is the collateral for the loan, the lender wants to insure it against damage that could diminish its value.
