Definition of "Hazard insurance"

Maria Lourdes Perez real estate agent

Written by

Maria Lourdes Perezelite badge icon

Keller Williams NYC - Queens/Bayside

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.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

You’ll find the most common definition and use of the term ‘perimeter’ in mathematics, more precisely geometry, to determine an item’s or land’s surface area. ...

(1) Rectangular area bounded on all sides by consecutive streets. It is part of a platted area. (2) Substantial amount of real estate properties to be sold together. (3) Group of houses, ...

Private company established in 1957 and headquartered in Milwaukee, WI, providing private mortgage insurance (PMI) to mortgage lenders granting mortgages to mortgagors not having at least a ...

Underwriting is a term often used with financial connotation. It is a process that helps individuals or institutions to determine if it’s worth taking a financial risk in a particular ...

System of interconnected pipes, radiators, and/or ducts designed to heat a building utilizing a main heating unit. The system is controlled through a thermostat that regulates the ...

Federal agency within the Department of Housing and Urban Development that provides financing to home buyers, particularly those with little cash or with a need to lower monthly payments. ...

Tables used to compute the monthly mortgage payment that consists of principal repayment and interest. A loan amortization type of formula is used. The tables have monthly payments for any ...

Large scale map of an urban area detailing land use. City plans are essential for projecting the growth, development, and redevelopment of the urban area. The major objective of a city plan ...

Investment in residential properties by private businesses and people. ...

Popular Real Estate Questions