What Is Home Hazard Insurance? The Basics and FAQs

Evelyn Long

Dec 15, 2023

decaying home

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Complicated financial terms make buying a house inaccessible for many without a professional’s expertise or hours and hours of internet searches and research. You hear what others consider a “best practice,” while another article combats that advice with a well-rounded argument. When it comes to insurance, it becomes even dicier when all insurance is a gamble. So, what is home hazard insurance and is it necessary to add to your insurance portfolio?

What Is Home Hazard Insurance?

Home hazard insurance provides coverage for specific risks outlined in the policy. These usually encompass structural concerns and physical damage. It is not the same type of insurance as homeowners. Home hazard is typically an aspect of homeowners insurance instead of a separate policy. Lenders might require you to have a specific amount of home hazard coverage to meet the terms of a home loan.

Consider home hazard insurance as an extension to a homeowners policy because it does not consider aspects of the home already insured by the foundational homeowners coverage. For example, many homeowners insurances have liability, which home hazard does not have. Knowing this will help you understand how claims would work if those unfortunate circumstances arise. 

Any personal property items protected under a homeowners policy are not a feature of home hazard insurance. So, understand why certain facets of your property are not covered there.

What Are the Types of Hazards Covered?

As stated, home hazard insurance varies from policy to policy. However, there is a standard list of 16 perils most insurers use. They usually contain degrees of protection against the following:

  • Fire and lightning
  • Volcanic eruption
  • Windstorm and hail
  • Smoke
  • Explosions
  • Damage from elemental weight, like snow or ice
  • Riots
  • Structural damage caused by aircraft
  • Damage caused by vehicles, such as a collision with the facade
  • Falling or fallen objects, like trees
  • Vandalism
  • Theft
  • Unintentional water expulsion or overflow from appliances, like HVAC and plumbing
  • Frozen pipes, HVAC or sprinkler systems
  • Unexpected damage to plumbing, AC, heating and sprinklers, like cracking
  • Accidental damage because of short-circuiting or faulty electrical

Several weather-related incidents are on this list, but not all of them. Now, let’s discuss what types of incidents home hazard insurance does not cover. Most hazards not covered by home hazard insurance have separate hazard-specific policies, such as hurricane, tornado or earthquake insurance. Flooding falls under this umbrella, too. These are more circumstantial and common in specific regions, so it isn’t default in all policies.

From Clovered.

What Should You Consider Before Committing?

There are a few instances where you may not be required to have hazard insurance. What if the lender doesn’t need it? What happens if you pay off the mortgage and no longer have obligations to an external party? What if you buy a house in cash — do you have responsibilities to anyone other than yourself to get home hazard insurance?

These situations may put you in a position where home hazard insurance is a choice. Here are a few considerations to ponder before committing. 

First, you’ll want to look at climate and geography. What types of disasters are common, and how frequently do they plague your area? For example, if heavy winter snow occurs yearly, you can justify insurance to protect your roof from the weight. Claiming the insurance is cheaper than buying a new roof before it needs to be replaced.

Historical data isn’t enough to inform this decision, especially with the climate crisis causing unexpected weather patterns worldwide. Consider the freeze in Texas, where record-setting low temperatures left many unprepared citizens without power. An event like this could happen in your neighborhood tomorrow, making it easy to justify hazard insurance.

Ultimately, it comes down to a cost-benefit analysis and how much you want to protect the money you put into the home. Consider the yearly amount you would pay in insurance premiums versus renovations and repairs for potential damage. This will help you gain a clearer perspective on whether it’s worth it. Insurance is always a guessing game, but is a lifetime’s worth of premiums cheaper than various risks on your home? Potentially.

house damaged by weather hazard

How Much Does Home Hazard Insurance Usually Cost?

Your rate depends on several factors. Insurers may perform a credit check before offering you a rate. The higher your score and cleaner your history is, the more likely you will receive lower premium rates. Alongside this, they may check your past insurance claims history. Insurers do this to verify that their clients are a cost-effective choice to onboard. If they deem you a risk, they may not offer insurance.

If you live in a high-risk area, your credit score may matter less. For example, coastal areas tend to have higher premium costs than landlocked areas because the homes are exposed to more threats. If a property has a high claim rate, insurers might question if they should “invest” in that property by providing insurance.

A few other factors that play into price are coverage types. For example, a low-premium home hazard policy may not cost much, but if it has a high deductible, it might break even compared to a high-premium policy with a low deductible.

The average cost for a homeowners policy with hazard coverage is around $1,582 annually on a $350,000 property. These averages vary widely based on state, property quality and environment. Cheaper states include Hawaii and Utah, while Oklahoma and Mississippi have much higher averages.

You can always price-check with multiple insurers before committing to a homeowners policy. A pro tip is to gather one quote and mention that price to the next company to see if they can beat it or match the price but provide more benefits.

What Is Home Hazard Insurance Good For?

Not everyone has home hazard insurance, but there may be more factors to warrant it now than ever. The climate crisis is causing inconsistent and severe weather events. Everything from internet trends to injustice may spread the concentration of vandalism or strange structural damage. Having home hazard insurance as a fail-safe will be an out of pocket cost, but at least you will feel a greater sense of peace over your expensive property investment.

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