What Is House Hazard Insurance?
House hazard insurance (also called casualty insurance) is a portion of your coverages in your homeowners insurance. This is insurance coverage that protects the homeowner against the risk of damages to the home in the event of hazardous acts (by nature or other types of mishaps) such as fire, wind, storms, vandals or theft.
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What Does It Cover?
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The hazard portion of your insurance policy will cover the cost of repairs to your home from storms, wind, fires, smoke damage, robberies, and acts of vandalism. It will cover the cost of repairs for any peril (cause of damage) that is listed or indicated in your insurance policy. Typically, there is a deductible amount to pay, and that amount usually is deducted from the total amount of the cost to repair. (You may be offered a lesser premium cost in exchange for taking a higher deductible amount).
What It Doesn't Cover
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If you live in the coastal area of Florida or other state that is located on or near oceans (and considered to be "high risk"), your hazard portion of your homeowners insurance will not cover damages from flooding. This is a separate policy that your lender will require that you have coverage for. Also, a wind rider (add on) will be added to you policy, and a separate charge will be listed. If your home is located in California, you may be required to purchase an additional policy for earthquake coverage. These coverages are considered to be "named perils" and insurance coverage is required by your lender. There are other "named perils" in different parts of the country, including mudslides, expansive soils (soils that contain clay that expands and contracts at a rapid rate, causing damage to foundations and concrete on the ground). It can also include underground mining (called subsidence insurance).
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Lack of Use Coverage
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The hazard portion of your homeowners insurance may give additional funds to a homeowner who has experienced being displaced from the home due to major repairs, resulting in unlivable conditions. The homeowner may have to seek temporary housing, higher cost of food (restaurant use), loss of work or loss of income due to displaced tenants if the damage was done to a rental property.
Other Coverage Contained in Hazard Insurance
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The hazard portion of your homeowners insurance policy will cover replacement of your contents and furnishings in your home in the event of fire, wind, storms, or other destruction. It will normally be a lump sum for all items. Jewelery, special art, antique furniture or computers may be added separately, outside the lump sum limitation. This will also cover outside items or structures that are not attached to the home but are on the property, such as outbuildings, separate garages, or a pool.
Owner's Liability
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Homeowners insurance will allow for coverage of some liability for the homeowner. This can include someone slipping and falling on the property, then suing the homeowner for the cost of his medical bills. Your lender will not usually request this type of coverage, but it is better to have it and not need it than to need it and not have it.
Home Hazard Insurance Is a Necessity
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If you have a mortgage, homeowners insurance (which contains hazard coverage) is a requirement. Lenders will not gamble with their investment. In the event your insurance is canceled, they will place "forced insurance" on your home, which is very costly to you. If you do not have a mortgage, you should require it for yourself. It can be expensive, depending on your location and coverages, but is by far the lesser expense if you find yourself with no insurance and a fire (or other hazardous event) occurs.
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