What Is Hazard Insurance?

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 by lenders, 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.

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.

How Does Hazard Insurance Work?

If a covered disaster like 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. 

What’s the Difference Between Hazard Insurance and Homeowners Insurance?

Homeowners insurance is 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 that lenders refer to as hazard insurance.

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
• Power surges
• 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 one.

• Dwelling coverage: Protects the structure or building of your home from listed perils like fire or wind.
• 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 and furniture, 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 Is Not Covered by Hazard Insurance?

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 to date with all the additional coverage you need to protect your property from these natural disasters.

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How Much Does Hazard Insurance Cost? 

The national average cost of homeowners insurance is $1,211 per year, based on $500,000 in dwelling coverage, $500,000 in liability coverage, and a $2,000 deductible. 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, including your location. 

Do I Need Hazard Insurance? If So, How Much Hazard Insurance Do I Need?

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. You will want to review your home insurance policy with your independent insurance agent to make sure you have high enough coverage limits to cover the full cost of rebuilding your home if it gets destroyed, which is referred to as "replacement cost coverage."

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
The Hartford
Progressive
Nationwide
Farmers Insurance

Frequently Asked Questions about Hazard Insurance

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.