Is Hazard Insurance The Same As Homeowners Insurance?

Definition of "Is Hazard Insurance the Same as Homeowners Insurance?"

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.

Hazard Insurance vs. Homeowners Insurance

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:

  • wall or roof damage caused by policy specified natural disasters,
  • Trees or other objects falling on the property and causing damage to the home’s structure, 
  • Water damage,
  • Lightning damage.

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:

  • Valuable items blanket - protection for valuable assets (jewelry)
  • Item breakdown - protection for household appliances
  • Flood 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

How Hazard Insurance Works?

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 homeowner policies 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 withstand the test of time.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.


Popular Insurance Questions

Popular Insurance Glossary Terms

Situation involving a chance of a loss or no loss, but no chance of gain. For example, either one's home burns or it does not; this risk is insurable. ...

Model state law of the NAIC setting minimum standards with which insurance products must comply if they are to qualify under the definition of a long-term care (LTC) insurance policy. These ...

Unexpected, unforeseen event not under the control of the insured that results in bodily injury. ...

Insurance company that actually underwrites and issues the insurance policy. The term is used because the insurance company assumes or carries the risk for policyowners. The agent usually ...

Contract that may or may not provide more in benefits than premiums paid. For example, with only one premium payment on a property policy an insured can receive hundreds of thousands of ...

Agent who is licensed and who markets and services insurance policies in a state in which he or she is not domiciled. ...

Complete coverage for hospital and physician charges subject to deductibles and coinsurance. This coverage combines basic medical expense policy and major medical policy. ...

Same as term Arbitration Clause: rovision in a property insurance policy to the effect that in the event the insured and insurer cannot agree on the amount of a claim settlement, each ...

coverage on the bank's premises for burglary of monies, securities, and other properties from within the bank's safe (s); robbery of monies and securities; loss of monies and securities as ...