Your home may be one of the biggest purchases you ever make in your life. To make sure that it’s well-protected enough to serve you and your family throughout the years, you’ll want to safeguard your home as much as possible. It’s even more crucial if
you live in a particularly high-risk area. Is your location especially vulnerable to those hot and dry days, perfect for wildfire conditions? Or perhaps you may live in an area that welcomes frequent storms full of lightning, wind, and rain? No matter
what hazard you’re surrounded by, you can probably say with confidence that you don’t want to be paying for those damages out of your own bank account. So, what solutions lie out there for you to get sustainable coverage?
Here’s all you need to know about basic home hazard insurance. In familiarizing you with the nuts and bolts, you’ll be more empowered to protect the home in which you and your family live in.
What is hazard insurance?
At its fundamental core, hazard insurance exists to protect your home from the damaging effects of natural disasters. It can often show up as a requirement for many mortgages or be involved when it comes to the purchase of a Natural Hazard Report. Whether
or not your home resides in a high-risk area for certain natural disasters such as fire, heavy storms, sleet, or hail, it’s important that you consider hazard insurance as an option. That’s because whenever any natural occurrence does get a chance to
damage your home, hazard insurance will be there to help pay for it all.
Is hazard insurance a separate type of insurance?
Rather than being its own type of insurance, it’s actually a subsection within your general homeowners insurance. However, in most cases when you’re conversing with any lenders, they’ll refer to hazard insurance separately.
Is home hazard insurance required for a mortgage?
Although mortgage requirements differ based on lender and location, they usually require some level of hazard insurance to be paid for. In addition, they might even request that you pay for more coverage for a specific hazard that your location is especially
prone to, such as tornadoes in the Midwest or wildfires out in the West Coast.
What exactly does hazard insurance cover?
Now that you know the general basics of what hazard insurance is, it’s time for you to delve deeper into the specifics. Like most insurance policies, hazard insurance narrows everything down to what’s specifically covered and not covered. As you’re examining
what it includes, it’s up to you to make sure that it’ll cover the disasters that your location is most at-risk for. Read the subsection of the homeowners insurance policy carefully and consult with your insurance agent if you run into any questions.
Damage from the following is covered under home hazard insurance:
- Snow, ice, and sleet
- Fire and smoke
- Hail, wind, and lightning
- Vehicles including cars and aircrafts
- Fallen trees and objects
- Theft and vandalism
- Damage caused by appliances such as your HVAC system
Hazard insurance covers only the damage that your home’s structure sustains, including affected areas such as your garage or your windows. If damage occurs to your personal property like a TV set or causes any injury, then hazard insurance wouldn’t cover
Believe it or not, but hazard insurance doesn’t always cover every single possible natural disaster that occurs. In fact, two of the largest natural disasters aren’t included in what’s covered under your hazard insurance premium — namely, the flood and
the earthquake. In order to protect your home from a flood, then you’ll be required to purchase a separate flood insurance. The same goes for earthquakes, landslides, and mudslides alike, so do some research on what types of insurance are available and
whether or not your location has frequent occurrences of these natural disasters.
How much will hazard insurance cost?
While there’s never a clear-cut number that you can look at for how much hazard insurance will cost, you can get an estimate based on a few different factors. One of them is where you live and what your credit score currently looks like. The more natural
disaster-prone location and the lower the credit score, the higher of a premium you might be required to pay. The answer also depends on the type of deductibles and limits that you want for your insurance plan, which further changes how much you’ll have
In some cases or locations, hazard insurance can get pretty expensive. That’s why plenty of mortgage lenders have developed what’s called an escrow account to help you pay for your insurance in more bite-sized monthly pieces. You can either opt into it
or have it automatically added to your insurance policy. What it basically does is split your payments across 12 months of a year so that payments are more manageable to handle.
At the end of the day, it’s important to have a general idea of what your homeowner’s insurance covers. A big part of that is the hazard insurance subsection, which aims to protect your home from structural damages in the event of a natural disaster.
No one hazard insurance plan is the same, as coverage differs from the location of the home, the financial wellbeing of the property owner, what additional coverage is needed, and a variety of other factors.
To make sure that you’re safeguarding your home as much as possible, you can strike up a conversation with your mortgage lender or your insurance agent. If you have any questions about the properties in El Paso, we here at Brian Burds would be happy to