What is hazard insurance?
Property owners may consider hazard insurance for protection against damage caused by hail, wind, snow, or rain. Hazard insurance offers protection from natural disasters to the main dwelling and nearby structures, like garages or sheds.
Come flood, windstorm, or earthquake, you want your insurance company to be working for you. Hazard insurance, in the correct amount, is the way how.
We hate to break it to you, but you need hazard insurance. It’s a vital piece of your insurance puzzle.
So let’s dig in and get you the hazard insurance you need.
Spoiler alert: Hazard insurance is part of your homeowners insurance policy. Use Insurify to shop and compare home insurance rates today!
Hazard Insurance 101
Your mortgage lender will require you to carry hazard insurance as part of your loan agreement, and some hazards may be required. Luckily, hazard insurance is part of your home insurance policy, which is made of several components. These include:
Falling under the two categories in bold, hazard insurance covers the structure of the home from hazards, also called perils. The structure of your home includes:
Walls
Floors
Built-in Appliances
Roof
Attached Garage
Perils and high risk factors that you may need in your insurance plan include:
Fire
Smoke
Wildfire*
Windstorm
Hail
Lightening*
Weight of ice, sleet, and snow*
Freezing*
Volcanic eruption
Earthquake*
Power surges
Burst pipes
Water damage (not from a flood)
Theft
Vandalism
Vehicle Damage
Aircraft Damage
Falling Objects*
Riots
Explosions
Some perils will be covered through the dwelling component. Others, marked with an asterisk, usually require an additional rider or a separate policy.
Open vs. Closed Perils: Whats the difference?
How do you know if a peril is covered? There are two ways a homeowners policy covers your risks: through open or closed perils.
| Closed Peril Policy | Open Peril Policy |
|---|
- Perils covered are named in the policy.
- Named perils can be found on the declarations page of your policy documents.
- Usually more expensive.
| - Perils NOT covered are named in the policy.
- Excluded perils can be found on the declarations page of your insurance documents.
- Usually less expensive.
|
|---|
Hazard Coverage By Type of Policy
You may know that there are seven types of homeowners insurance policies in use. These policies interact with hazards differently.
| Type | Open/Closed Perils |
|---|
| HO-1 Basic Form | Closed Peril Policy. Covers 10 perils, which typically includes:- Fire, smoke, and lightning
- Wind and hail
- Theft, vandalism, riots, and civil unrest
- Volcanic eruption
- Explosion
- Damage from vehicles or aircraft
|
|---|
| HO-2 Broad Form | Closed peril policy. Covers all perils in an HO-1 policy, plus a few extra. These usually include:- Weight of ice and snow
- Freezing
- Earthquake
- Power surges
- Burst pipes
- Water/steam overflow/discharge
- Falling Objects
|
|---|
| HO-3 Special Form | Open peril policy. Usually covers everything in an HO-2 unless the peril is excluded. |
|---|
| HO-5 Comprehensive Form | Open peril policy covering your home and personal property. The broadest coverage of all policies. Best for people with high-value personal belongings. |
|---|
| HO-6 Condo Form | Closed peril policy. Covers all perils as in the HO-2 policy, but only for the unit itself. Your HOA fees pay for insurance covering the condo structure as a whole. |
|---|
| HO-7 Mobile Home Form | Open peril policy. Similar to HO-3 policies, but tailored to mobile homes. |
|---|
| HO-8 Older Home Form | Open peril policy. Similar to HO-3 policies, but tailored to older homes. |
|---|
In case it’s driving you crazy, HO-4 is a tenants policy, commonly called renters insurance. Renters insurance is for personal liability and personal property coverage, not the structure of a home. Separate coverage like earthquake insurance or flood insurance may be necessary in addition to standard policies.
Hazard Insurance Reimbursement
There is one crucial detail we must discuss, and that’s reimbursement. The way you are reimbursed can make a big difference, not just in how you’re covered, but also how much you pay.
| Type of Reimbursement | How it Works | Expense |
|---|
| Actual Cash Value | Reimburses you for the value of your property at the time it was damaged. | Low Cost |
|---|
| Replacement Cost Value | Reimburses you for the cost of replacing your property, no matter what it’s currently valued. | Medium Cost |
|---|
| Extended Replacement Cost | Reimburses you for the cost of replacing your property, plus | High Cost |
|---|
Finding Cheap Hazard Insurance
The key to getting cheap home insurance—remember hazard insurance is part of a home insurance policy—has three parts:
Getting enough insurance to cover you when something goes wrong.
Not getting more insurance than you need.
Taking advantage of discounts.
The first two keys we just discussed. The third key, using discounts, is a great way to lower your rates that does not impact your homeowners insurance coverage. You can ask your current insurance provider about all the discounts it offers. Some discounts will work for you, and some won’t. Insurers often offer these common discounts that can help you cut insurance cost:
You can also pay a lower insurance premium by investing in your home. This includes:
Home improvements
Fire alarm systems
Burglary system
Maintenance of trees
Roof replacement
Some investments are more expensive than others. But it’s a good reminder that those pesky repairs and maintenance tasks mean you pay less over time. Homeownership is a long game.
See more: Texas Homeowners Insurance Quotes
See more: Georgia Homeowners Insurance Quotes
See more: California Homeowners Insurance Quotes
The Best Way to Save on Home Insurance
A hazard insurance policy may sound scary, but by now, you know it’s not so bad. It’s an essential, maybe the most essential, part of your home insurance policy. And you know that discounts are an important way to get cheap home insurance without sacrificing insurance coverage. Landslides! Mudslides! Earthquakes, oh my! Protect yourself from it all – get yourself hazard insurance coverage today.
Ready for home insurance right now? Use Insurify to customized free quotes and explore your policy options. Your best rate for home insurance is waiting for you, shop now! Living expenses are expensive – home insurance doesn’t have to be. Compare quotes now.
