Hazard Insurance
There’s a lot of confusion regarding the hazard insurance definition. Many people think it’s a synonym for homeowners insurance but they’re wrong. Hazard insurance is actually part of the homeowner’s insurance policy.
Hazard insurance refers to one of the coverages within homeowner’s insurance; the protection against perils like fire, severe storms, wind hails and other natural events to the dwelling. Whatever happens to the structure is considered hazard insurance. That is; the other parts covered by the policy – like liability insurance and personal property insurance – are not considered hazard insurance.
But it is more than that. Flood insurance and Earthquake insurance, for instance, are not typically included in a homeowner’s insurance policy and are considered hazard insurance. So it’s fair to say that hazard insurance is a definition of a type of peril to your home that can be insured, and that peril is natural hazards from the outside world to the structure of your property.
While it is in the owner’s best interest to preserve his interest in the house with this type of insurance, it’s the mortgage companies who require this policy most of the times. Here’s why: an accident inside the house, for instance, will hurt the homeowner financially and, in the long run, that’s bad for the lender, but not immediately. However, a hazard to the structure is immediately bad because it devalues the home. If the owner doesn’t fix it and later on defaults and the house goes on to foreclosure, the lender will now potentially have a house that’s worth less than what he borrowed –making the lender unable to recuperate the investment.
Real Estate Advice:
We understand there are a lot of insurances out there and it feels like it’s draining your money away. But there’s nothing more dangerous than living without coverage and 10 out of 10 real estate agents will tell you this one is the most important one. After all, if you don’t protect your asset, in the case of an accident it will literally make you lose a lot of money.
Popular Real Estate Terms
Conifer wood, such as pine and redwood. ...
The time period a real estate investment is held. The return is tied to the time period of the investment. The period is used for income tax purpose to determine whether a profit earned or ...
Defect in the tax law that either may provide a loophole to minimize the tax payment or result in higher taxes than there should be. ...
The process of changing, updating, and altering the appearance and structural characteristics of a building. For example, John remodels the kitchen in his home by replacing the cabinets, ...
Limited partnership in which limited partners rely on the general partner to choose specific properties after the funds are available. ...
Claude in a contract, title, or mortgage that is subject to being annulled, repealed, or revoked upon the satisfaction of a claim or completion of a future event. ...
person's behavior partly genetic and partly learned through experience over time. Some people have good personal traits while others have poor ones. ...
Same as term government rectangular survey: Way in which the U.S. government uses to subdivide public land. Land is designated as either a base line (East-West) or principal meridian line ...
Initial user of real estate property, such as the first tenant in a newly constructed apartment building or office building ...
Have a question or comment?
We're here to help.