Hazard insurance provides coverage that protects property owners against damage caused by fires, severe storms, hail, sleet, or other natural events. It typically refers to a section of a homeowners insurance policy that safeguards the home and surrounding structures. Here is what consumers need to know about hazard insurance.

How Hazard Insurance Works

Hazard coverage is usually a subsection of a homeowners insurance policy that protects the main dwelling and other nearby structures, such as a garage. Hazard insurance financially protects a property owner against physical damage to the property structures caused by sudden perils.

The events that can damage your home and surrounding structures that are covered by hazard insurance include: 

  • Fires
  • Hail
  • Lightning
  • Windstorms
  • Snow, including the weight of wet snow, ice, and sleet
  • Rainstorms
  • Sinkholes
  • Other natural events

Flood hazards are not covered by the standard homeowners policy.  A separate policy must be purchased from the National Flood Insurance Program or the private flood insurance market. 
 

Suburban wildfire
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The Importance of Hazard Insurance

  • Protection Against Natural Disasters: It covers damage from events like fires, storms, and other hazards, ensuring you can repair or rebuild your property without bearing the full financial burden.
  • Mortgage Requirement: Lenders will require hazard insurance as part of a homeowner policy to protect their investment in your property. Without it, you might not be able to secure a mortgage.
  • Financial Security: It provides peace of mind knowing that you have a safety net in case of unexpected disasters, preventing significant financial loss.

Is Hazard Insurance Required by Mortgage Lenders?

Mortgage lenders will require homeowners to have insurance coverage as a condition for securing a home loan. This requirement often includes both hazard coverage and liability protection and is typically integrated into a homeowners insurance policy.  

Lenders impose this requirement to protect their financial interests in the event of property damage. Hazard insurance ensures that the property remains adequately protected, reducing the risk of a substantial financial loss for both the homeowner and the lender.  

Does Your Client Need Hazard Insurance?

Real estate professionals are not hazard risk or insurance experts. However, they can connect clients with insurance agents and encourage them to discuss their specific insurance needs. By doing so, agents may empower their clients to make well-informed decisions about their insurance coverage, ensuring their homes are protected from life's unexpected challenges.