The short and simple answer is not quite. When you purchase or own a house, you need to have homeowners insurance for that property. A homeowners insurance covers potential losses and/or damages that happened to the policy holder’s place of residence. Along with that, it covers damages affecting the furniture and other personal property within the home.
Through homeowners insurance, the policyholder is covered from liability from accidents that occurred on the property or in the home. Part of this coverage is granted by hazard insurance, also referred to as dwelling coverage. Hazard insurance is a part of the homeowners’ insurance policy.
There is a reason the hazard insurance is bundled together with homeowners insurance. The two work together to provide the coverage your property needs. You might also become aware that while you’re buying a home, your lender will require you to have a policy that covers hazard insurance. The reason behind this is that while homeowners insurance covers interior and exterior damages to the property and possessions, loss, and injury, the hazard insurance part is responsible for structural damages to the property.
Homeowners’ insurance helps pay for repairs caused, and hazard insurance covers the cost of structural damages. Together they protect against financial damages brought to the property through things like:
While there are many other things that hazard insurance or dwelling coverage provides protection from, the following are other types of coverage that are also a part of the homeowners’ insurance:
Now, while homeowners insurance does include basic hazard insurance, in some cases, it does not provide coverage for damages produced by Acts of God.
Most homeowner insurance policies cover damages affecting the home’s structure unless it isn’t specified in the policy. In which case, the homeowner must get extra coverage for particular causes. Some policies are more limited in their coverage, and the type of hazard they cover is on a “named perils” basis. These types of homeownerpolicies specify which perils are covered and what is not specified needs extra coverage. The policyholder might desire these additional coverages to insure their property from any potential threat.
For example living in an area prone to tornadoes, wildfires, flooding, or landslides can mean that your property is in a high-risk location. While homeowners insurance will cover some structural damages, having the property covered for the hazard that is likely to occur in the area can increase the insurance cost.
The value of hazard coverage depends on the cost required to replace the home in case of a complete loss. You can establish this value with the insurance agent or broker. It depends on the total value of the property in the current housing market and the amount the policyholder wants to cover the property. It is up to the policyholder how valuable their hazard coverage is as it is better than paying upfront and out of pocket in case of total loss. These types of policies are renewed annually and last for one year.
With the impact of climate change, homeowners find themselves needing hazard insurance more often than before in North America as extreme weather conditions start affecting more areas every year. Besides talking to your insurance agent regarding your coverage, find real estate agents near your location if you plan to purchase a home. These two professionals can ensure your home will have everything it needs to withstandthe test of time.