Updated: January 2019
Hazard insurance is a term sometimes used to describe the coverages that homeowners insurance provides for certain risks, according to the Consumer Financial Protection Bureau (CFPB). Some common examples of hazards (also referred to as perils) that are often covered by homeowners insurance include fire, theft and vandalism, among others.
Mortgage lenders usually require proof that you have a homeowners insurance policy to help pay to repair damage caused by those hazards, says the CFPB.
Homeowners insurance typically helps cover damage from hazards such as:
It's important to remember that not all insurance policies are the same. Be sure to read your policy or check with your agent to learn what risks may or may not be covered by your policy. For example, damage caused by floods and earthquakes are typically not covered by homeowners insurance.
Homeowners insurance generally includes three types of coverage that helps protect your home, other structures on your property and your belongings. Here's an overview of how a typical homeowners insurance policy may help protect you from perils such as the ones listed above.
Dwelling coverage.
The physical structure of a home is protected by dwelling coverage. For instance, if fire damages your walls or hail dents your siding, this coverage may help pay for repairs.
Other structures coverage.
Homeowners insurance typically extends to structures other than an actual home. If you have a fence, shed or detached garage on your property, you may find insurance will help pay to repair or replace them after a covered loss.
Personal property coverage.
Personal property is a term used to describe your belongings. Think about all of the items you own: your clothes, electronics and housewares, for example. All of those items are considered personal property. Suppose your television is stolen or your furniture is damaged by a fire in your home. This coverage may help pay to replace items damaged or destroyed by certain perils.
When a covered hazard, such as fire or theft, prompts you to file a homeowners insurance claim, you may have to pay a deductible, which is the amount of money you have to pay out of pocket before your insurance company begins to help pay for a claim. The deductible for each coverage in your homeowners policy is stated in your policy declarations.
It's also important to understand that each coverage has a limit, which is the maximum amount your insurer will pay toward a covered loss. Any expenses beyond your coverage limit are your responsibility. Your insurance agent can help you raise or lower your coverage limits to suit your needs.
Do you have more questions about how insurance may help you when the unexpected occurs? Contact a local agent for help crafting a homeowners insurance policy that fits your needs.
