Homeowners Hazard Insurance
Hint: it's not so much a type of insurance as it is a term used by lenders.
When shopping for coverage for your property, you know you want it protected against all kinds of threats, or hazards. But while you may have heard the term "hazard insurance," it's not actually a specific policy you can buy. Still, the term hazard insurance is used in the industry, which can get confusing for the consumer.
Fortunately, independent insurance agents can help clear up these confusing industry terms for you. Even better, they'll get you equipped with the coverage your home or other property needs. But first, let's take a closer look at what hazard insurance really means.
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What Is Hazard Insurance for Homeowners?
Despite how it sounds, hazard insurance isn't a type of policy you can buy. Instead, hazard insurance is a term used by lenders to refer to the structure, building, or dwelling section of a homeowners insurance or commercial property insurance policy. Your home insurance or business property insurance includes coverage for different sections, one of which is contents, and one is the dwelling or structure.
If a covered disaster like a fire damages your property's structure, building, or dwelling, your coverage would respond accordingly, and the lender might refer to this as hazard insurance. Some lenders use the word "hazard" interchangeably with "peril," but the two aren't exactly the same. A "hazard" is an insurance term that refers to a condition or event that makes a peril more likely to happen.
Do I Need Hazard Insurance?
While hazard insurance itself isn't a policy you can buy, you do need the coverage it actually refers to. Dwelling or structural coverage is included in homeowners insurance and commercial property insurance. This coverage protects against numerous types of disasters, including fire, lightning strikes, vandalism, wind damage, and more. Standard property coverage includes hazard insurance.
Who Sells Hazard Insurance?
Hazard insurance is available from many insurance companies in the form of homeowners or commercial property insurance. The best way to find the right carrier for you is through working with an independent insurance agent. Independent insurance agents know which insurance companies to recommend to meet your needs, and can provide informed suggestions based on company reliability, rates, and more.
While many insurance companies could provide hazard insurance for you, finding coverage could also depend on the area you live in. Here are a few of our top picks for homeowners and commercial property coverage.
| Top hazard insurance companies | Star rating |
| Liberty Mutual |
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| Farmers Insurance |
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| The Hartford |
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| Progressive |
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| Nationwide |
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One hazard insurance company outshines its competitors
- Best homeowners hazard insurance company: Nationwide
Nationwide is a leading small business insurer with an "A+" rating from AM Best. The carrier is on the Fortune 100 list and currently provides more than half a million customers across the US with quality coverage. Aside from their outstanding insurance catalogue, Nationwide offers superior customer service and 24/7 claims reporting.
Nationwide explains up front that hazard insurance refers to one section of your property coverage. The carrier was also our top pick for commercial property insurance, and offers quality homeowners insurance, too. Nationwide's website states that hazard insurance included in homeowners insurance covers the following.
- Fire damage
- Hail
- Lightning
- Damage
- Theft
- Vandalism
- Fallen trees
- Vehicles that run into your home
- Explosions
An independent insurance agent can help you determine if Nationwide is the right carrier to meet your hazard insurance, homeowners insurance, or commercial property insurance needs.
Hazard Insurance and Mortgages
Hazard insurance generally refers to the dwelling or building coverage section of homeowners or commercial property insurance.
You're often required by lenders to carry homeowners insurance if you've taken out a mortgage on your home. What the lender really wants is for you to have hazard insurance, or the section of your homeowners coverage that covers losses affecting the structure or dwelling of the building. Often having a standard homeowners insurance policy will satisfy these requirements.
However residents who live in high-risk areas may be required to purchase additional coverage. Those in flood zones, for example, might be required to buy flood insurance, since coverage is not included in standard homeowners policies and is a separate policy. Some homeowners may also be required to purchase earthquake insurance or wind-only policies, depending on their area's risks.
What Does Hazard Insurance Cover for Homeowners?
Hazard insurance is just one section of your homeowners insurance or commercial property policy that protects the structure of your building. This coverage tends to include many different perils, but some of the most common are the following.
- Wind and hail damage
- Fire damage
- Lightning strikes
- Theft and vandalism
- Fallen objects and trees
- Explosions
An independent insurance agent can further explain the coverage included in the hazard insurance portion of your property coverage.
Three Home Insurance Coverages that Protect Property
A typical homeowners insurance policy often includes three coverage sections to help protect your property. Here's a simple breakdown of each.
- Dwelling coverage: Protects the structure or building of your home from listed perils like fire, wind, etc.
- Other structures coverage: Protects detached structures like sheds and garages on your property from many or all of the same perils as dwelling coverage, though the limit may be a lesser amount.
- Personal property/contents coverage: Protects your personal belongings like clothing, furniture, etc. from many or all of the same perils listed on dwelling coverage.
An independent insurance agent can help you review your homeowners insurance policy and further explain the differences in each of the property coverage sections.
What Doesn't Hazard Insurance Cover?
Anything excluded in the dwelling coverage section of your homeowners insurance or commercial property insurance won't be covered by hazard insurance. Common coverage exclusions are flood damage, earthquake damage, maintenance costs, and disasters caused by poor upkeep.
To protect your property against earthquakes or flood damage, you'll need a separate earthquake insurance or flood insurance policy. An independent insurance agent can help you get up with all the additional coverage you need to protect your property from these natural disasters.
What’s The Difference Between Hazard Insurance And Homeowners Insurance?
Homeowners insurance is actually a type of insurance you can buy, and it offers valuable protection for your home. Homeowners insurance includes coverage for your property, such as the dwelling and your personal property, but also important liability coverage.
Homeowners insurance provides liability protection in case you get sued by a third party for bodily injury or personal property damage. Liability coverage covers attorney, court, and settlement fees, up to your policy's limit. Your policy also includes a section which lenders refer to as hazard insurance.
The only time you'd need to add supplemental hazard insurance is if you live in a high-risk area that's prone to storms like hurricanes or earthquakes. Your mortgage lender might then require you to add flood insurance, wind-only insurance, or earthquake insurance.
How Much Does Hazard Insurance cost?
The cost of your hazard insurance will be factored in as a percentage of your total premium for homeowners insurance or commercial property insurance. The cost of these policies varies depending on several factors like your location, but you can check out some state average costs for home insurance below.
Average premiums for homeowners and renters insurance by state
| State | Homeowners | Renters |
| Alabama | $1,409 | $222 |
| Alaska | $984 | $175 |
| Arizona | $843 | $175 |
| Arkansas | $1,419 | $211 |
| California | $1,073 | $178 |
| Colorado | $1,616 | $164 |
| Connecticut | $1,494 | $188 |
| Delaware | $873 | $157 |
| D.C. | $1,264 | $157 |
| Florida | $1,960 | $185 |
| Georgia | $1,313 | $214 |
| Hawaii | $1,140 | $181 |
| Idaho | $772 | $152 |
| Illinois | $1,103 | $166 |
| Indiana | $1,030 | $172 |
| Iowa | $987 | $144 |
| Kansas | $1,617 | $172 |
| Kentucky | $1,152 | $166 |
| Louisiana | $1,987 | $234 |
| Maine | $905 | $149 |
| Maryland | $1,071 | $161 |
| Massachusetts | $1,543 | $191 |
| Michigan | $981 | $185 |
| Minnesota | $1,400 | $140 |
| Mississippi | $1,578 | $252 |
| Missouri | $1,383 | $179 |
| Montana | $1,237 | $147 |
| Nebraska | $1,569 | $149 |
| Nevada | $776 | $182 |
| New Hampshire | $984 | $148 |
| New Jersey | $1,209 | $160 |
| New Mexico | $1,075 | $186 |
| New York | $1,321 | $189 |
| North Carolina | $1,103 | $158 |
| North Dakota | $1,293 | $126 |
| Ohio | $874 | $169 |
| Oklahoma | $1,944 | $236 |
| Oregon | $706 | $161 |
| Pennsylvania | $943 | $157 |
| Rhode Island | $1,630 | $185 |
| South Carolina | $1,284 | $184 |
| South Dakota | $1,280 | $127 |
| Tennessee | $1,232 | $195 |
| Texas | $1,955 | $225 |
| Utah | $730 | $155 |
| Vermont | $935 | $153 |
| Virginia | $1,026 | $152 |
| Washington | $881 | $160 |
| West Virginia | $970 | $189 |
| Wisconsin | $814 | $143 |
| Wyoming | $1,187 | $146 |
| United States | $1,249 | $179 |
While certain states like Oregon and Utah paid less than $700 annually for their homeowners insurance, many other states paid $1,400 or even $1,500. The United States' average was $1,211.
As for commercial property insurance, premium costs will also vary depending on the size and value of your property and your location. However, costs typically range between $500 and $1,000 annually.
Hazard Insurance Deductibles and Limits
Your homeowners insurance or commercial property insurance policies come with coverage limits, or the maximum amount the insurance company will pay for a covered claim. If you have a $100,000 homeowners insurance policy, that's the highest amount they'll pay out if a huge disaster severely damages your home.
These policies often also come with deductibles, or the amount you'd be responsible for paying on your own before coverage begins reimbursing you. Your deductible may be a dollar amount, like $500, or a percentage of your total coverage. Home insurance sometimes has a deductible of 2% of the home's value.
Frequently Asked Questions about Hazard Insurance
No, hazard insurance just refers to one aspect of your homeowners insurance. Homeowners insurance is a type of insurance you can buy, and it offers valuable protection for your property, such as the dwelling and your personal property, but also important liability coverage.
Hazard insurance is a term lenders use to refer to the dwelling or structural coverage section of your homeowners insurance policy. Covered perils in hazard insurance include fire, lightning, hail, vandalism, and more.
A few things could cause the cost of hazard insurance to increase, such as being located along a coast or in another area prone to certain storms, like hurricanes. Property located in a bigger, expensive city could also result in higher hazard insurance costs, as could historically risky properties.
You're often required by lenders to carry home insurance if you have a mortgage. What the lender really wants is for you to have hazard insurance, or the section of your home coverage that covers losses affecting the structure or dwelling of the building. Often having a standard home insurance policy will satisfy these requirements.
Hazard insurance protects against damage caused by fires, severe storms, and other natural events for homeowners and commercial property owners. Coverage refers to the dwelling or structural section of these policies. Mortgage lenders often require this coverage.
Save on Home Insurance
Our independent agents shop around to find you the best coverage.
How Can Independent Insurance Agents Help with Hazard Insurance for Homeowners?
It’s simple. Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut the jargon and clarify the fine print, so you know exactly what you’re getting.
There’s no property or residence too small for our gifted independent insurance agents. They have access to multiple insurance companies, ultimately finding you the best hazard coverage, accessibility, and competitive pricing while working for you.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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https://www.iii.org/sites/default/files/docs/pdf/insurance_factbook_2021.pdf
https://www.iii.org/article/homeowners-insurance-basics
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