Hazard Insurance
Definition of "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
Significant action and duties performed by an individual in a real estate activity. An example is a partner in a real estate venture that makes key decisions and performs a lot of work. ...
Angle from north or south of a property. When a real estate appraiser does surveying, it is looked at clockwise from north. It may assist in determining the form or boundaries of land. ...
Property that is similar in characteristic and when exchanged is a nontaxable transaction. Any property that is not like-king, such as cash (boot), is taxed. As a result, a gain is not ...
The term ad valorem comes from Latin, and its literal translation is “according to value”, which makes the ad valorem tax definition easy to understand. Defining ad valorem tax ...
Recognizes profit on a long-term construction contract as it is earned gradually during the construction period. This approach is preferred over the completed contract method because it ...
Cement or mortar with a high moisture content developing it into a slurry solution allowing the ability to be poured or pumped into crevices, fissures, and masonry cracks and joints. ...
Many homebuyers or real estate investors only think of mortgages when it comes to financial aid in real estate purchasing. Lately, with the increasing desire of homebuyers to not be ...
Appreciation, or property appreciation in real estate is the increase in the value of a property or asset over time. This increase in value can be due to a number of factors; inflation, ...
A gift by will of real property. Absolute legasy: An unconditional and immediate gift. Conditional legasy: The bequest of a gift depends on the occurrence of something happening. For ...
Have a question or comment?
We're here to help.