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For homeowners, having a comprehensive home insurance policy is essential. It provides valuable protection in case your home gets damaged or destroyed in a covered event, like a windstorm, fire, or break-in. It also covers your personal items, liability, loss of use, and more.
One of the most common questions that homeowners have about home insurance is how it differs from hazard insurance. Home insurance and hazard insurance are related but they aren’t exactly the same. In this guide, we’ll explain the difference between hazard insurance vs. home insurance.
Home insurance is a bundle of policies that cover your home and your personal items. A typical homeowners insurance policy includes dwelling insurance, personal property insurance, liability insurance, medical payments insurance, and loss of use insurance.
Hazard insurance, on the other hand, only covers the physical structure of your home. Hazard insurance is the same thing as dwelling insurance, and it’s included with every home insurance policy.
Hazard insurance is not the same thing as home insurance. However, hazard insurance is a part of your homeowners insurance policy. When you purchase a basic home insurance policy, it automatically includes hazard insurance, which is more commonly called dwelling insurance.
The main difference between hazard insurance and home insurance is what’s covered. Hazard insurance only covers the physical structure of your home, and attached structures, like a garage. It doesn’t cover your personal items or your liabilities.
Homeowners insurance is a package of policies that protects more than just the physical structure of your home. The hazard insurance portion will cover your house, but you also get coverage for personal property, personal liability, guest medical payments, and loss of use.
Every homeowner can benefit from having home insurance. If you have a mortgage, most lenders require homeowners to carry a standard homeowners insurance policy that includes hazard insurance.
If the physical structure of your home gets damaged in a covered peril, you will file a claim under your hazard insurance. Once the claim is investigated and approved, you will receive a payout for the estimated cost of repairs.
Without hazard insurance, you would have to pay to repair or rebuild your home entirely out-of-pocket.
Home insurance is essential for every homeowner. You probably need home insurance to satisfy your lender’s requirements, but it also provides peace of mind.
Home insurance covers a variety of risks that you can face as a homeowner, including damage to the structure of your home, damage to personal items, third-party liability claims, guest injuries, and temporary living expenses if your home gets damaged or destroyed.
If you want to file a personal liability claim, personal property claim, medical payments claim, or loss of use claim, you need to have home insurance. Hazard insurance will only cover claims related to structural home damage.
Hazard insurance covers the physical structure of your house. It also covers structures attached to your home, like a garage or porch. It covers features like the walls, roof, ceiling, and foundation, as well as major home systems, like HVAC and plumbing, and permanent fixtures, like cabinets and large appliances.
Depending on your home insurance policy, your hazard insurance will either cover named perils or open perils. Named perils are specific losses that are listed in your policy. Open perils means that you are covered against any loss that is not explicitly excluded in your policy.
Some of the most common perils that hazard insurance will cover include:
Keep in mind that hazard insurance almost never covers damage from earthquakes or flooding, even if you have an open perils policy. If you live in an area that is prone to earthquakes or floods, it’s a good idea to purchase separate earthquake insurance and flood insurance policies.
There are a variety of ways for homeowners to save money on their home insurance policies. Here are some tips for getting a lower premium:
Most mortgage lenders require homeowners to have hazard insurance. This protects the lender’s financial interest in your home before it’s paid off. Before you close on your home, your lender will ask to see proof of home insurance with hazard coverage. If you file a hazard insurance claim, the mortgage lender is typically responsible for holding the money to ensure that the proper repairs are made to their standards.
Another name for hazard insurance is dwelling insurance, which is more commonly used. Hazard insurance and dwelling insurance may be used interchangeably since they reference the same thing.
Hazard insurance is a type of insurance that covers the physical structure of your home, as well as the roof and foundation. Hazard insurance also covers attached structures, major home systems, and permanent interior features, like cabinets, flooring, walls, and large appliances. Hazard insurance is included with every standard home insurance policy.
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