Finding the ideal homeowners insurance policy for your needs can be confusing. Aside from the different insurance-specific terminologies to know, you should also be able to choose from the mushrooming home insurance companies. One phrase you may hear when talking to insurance agents is ‘hazard insurance.’
You may be told that you have a certain amount of hazard insurance on your policy. But what does this mean and is hazard insurance the same as homeowners insurance. In this quick guide, we will help you understand what is hazard insurance and what makes it different from homeowners insurance.
Is Homeowners Insurance Similar to Hazard Insurance?
No, hazard insurance is not the same thing as homeowners insurance. However, it is part of your homeowners insurance policy. To put it plainly, hazard insurance is not a separate policy you need to buy, but rather one part of an average homeowners insurance policy.
It plays a vital role in your homeowners insurance policy, but it’s not an interchangeable term with homeowners insurance. You can deem it to be the same thing as dwelling coverage. For those who might not know, dwelling insurance is the part of your policy that covers your actual house, but not the contents of your home or other structures.
It is often regarded as hazard insurance since the average homeowners policy includes coverage for a list of perils, or hazards, that have the potential to damage or destroy your home. Keep in mind homeowners insurance entails a collection of coverage types that insure different aspects of your home.
What Hazard Insurance Entails
What hazard insurance covers depends on the type of policy you have. Hazard insurance protects against either named perils or open perils, depending on the type of policy. A named perils policy helps protect your home against 16 specific home insurance perils. Keep in mind perils is just another word to indicate the types of disaster that can happen to damage your home, like fire or flooding.
Among those named perils include explosions, falling aircraft/objects, fire, hail, and a handful of others. In the event that your policy is based on named perils, any peril not listed on your policy is not covered in your policy.
Now that you already know what is hazard insurance, why not consider including it when taking up homeowners insurance for your property?