Is Hazard Insurance the Same as Homeowners?

8/10/2017 (Permalink)

For maximum protection against the unexpected, a reliable homeowners insurance policy is the way to go.

As a home owner, you will likely have a need for this insurance at some point in your lifetime. Lending companies tend to use the terms "hazard insurance" and "homeowner's insurance" interchangeably, but there is a definable difference between the two.

Hazard insurance, which protects you financially from the effects of damage to the structure of your home from hazards such as natural events, vandalism, and fire, is usually bought PART OF your homeowner's insurance policy. Generally hazard coverage is not sold separately but is combined with liability and contents coverage as a package.

There are certain hazards that are not covered by homeowner’s insurance and they are listed as exemptions in the policy.  Examples include damage caused directly by pollution, floods, and earth movement. Open perils policies provide insurance coverage for any reason not specifically excluded in the policy.  A named perils policy, on the other hand, provides coverage only for the perils listed.  A homeowners named perils policy typically covers 16 named perils including fire, theft, windstorms and vandalism. 

A standard homeowners HO3 policy covers the structure of your home under open perils and contents such as clothes, furniture, appliances and books under named perils.  A standard homeowners HO5 policy covers the structure and contents under open perils. Many insurance companies have modified versions of the HO3 and HO5 policies so if you have questions about your homeowners policy coverage, be sure to speak with your insurance agent.  

For additional information from a related article, click here.