Differences Between Homeowners Insurance & Hazard Insurance

Differences Between Homeowners Insurance & Hazard Insurance

You may be searching for the differences between homeowners insurance and hazard insurance. If so, you’re at the right place with this latest blog post from the team at Portsmouth Atlantic Insurance. In this post, we’ll be going over the right way to protect your home through understanding the nuanced differences between the various forms of insurance for your home. The options available to you as a homeowner are plentiful, yet they can be confusing at times if you don’t know the differences between the various forms of insurance offered to homeowners. An example of this could be the differences between homeowners insurance and hazard insurance. We hope you enjoy this post, and should you have any questions, don’t hesitate to contact us and we’ll be happy to help in any way we can.

What is Homeowners Insurance?

Homeowners insurance is a comprehensive policy which is primarily designed to cover the various aspects of your home and property. Homeowners insurance is typically required by mortgage lenders and will include several key components:

  • Dwelling Coverage: Dwelling coverage protects the structure of your actual home against covered perils such as storm damage, fire, and other specific risks.
  • Personal Property Coverage: Personal property coverage will provide protection for the contents of your home such as furniture, appliances, and personal belongings against theft, damage, or loss.
  • Liability Protection: Liability protection covers any legal costs or medical bills arising if someone is injured on your property and you are deemed legally responsible.
  • Additional Living Expenses (ALE): ALE (Additional Living Expenses) will pay for temporary housing and living expenses should you need to reside elsewhere while your home is uninhabitable due to a covered peril.

What is Hazard Insurance?

Hazard insurance is often considered to be a part of homeowners insurance, specifically focusing on the physical, structural elements of your home. It will cover damage from specific natural disasters or hazards listed in your policy:

  • Fires
  • Windstorms (including hurricanes and tornadoes)
  • Hail
  • Lightning
  • Explosions
  • Other specific natural events

Hazard insurance is the primary component which offers financial protection against losses from the above listed natural events which could cause direct damage to your home.

Key Differences

  • Scope of Coverage: The primary difference between homeowners insurance and hazard insurance is the scope of coverage. Homeowners insurance is generally broader and will include liability coverage, personal property coverage, and additional living expense coverage. On the other hand, hazard insurance will strictly cover the structure of the home against specific perils.
  • Requirement: Mortgage lenders will require at least some form of hazard insurance, due to it protecting your home’s structure, which happens to be the collateral for the mortgage. Most homeowners will have a comprehensive homeowners policy which includes hazard coverage to satisfy the requirement and provide additional protections as needed.
  • Optional Coverages: Homeowners insurance policies can be customized with a number of optional coverages and endorsements which go beyond your average, everyday hazard insurance coverage. These endorsements may include coverage for water backup, identity theft protection, and more comprehensive personal property protection.

Which Do You Need?

Nearly all homeowners will need a comprehensive homeowners insurance policy which includes an adequate level of hazard insurance coverage. This will not only ensure compliance with lender requirements, but it will also provide a broader level of coverage for your property and liability.

When choosing your policy, it’s important to:

  • Always review the covered perils under the hazard portion of your homeowners insurance
  • Ensure your coverage limits are adequate enough to properly rebuild your home and replace your belongings in the event of a total loss
  • Consider additional coverages based on your specific needs and the risks associated with your home’s  location 

Choose Portsmouth Atlantic Insurance for All of Your Homeowners Insurance Needs

Hazard insurance is certainly a crucial part of your homeowners insurance. Understanding the full scope of everything involved when it comes to your homeowner insurance policy is so important. Through recognizing the differences between a homeowners insurance policy and hazard insurance, you can ensure you have the right level of adequate coverage for your home and protect your investment as needed. Enjoying your home with an added peace of mind can bring out the best elements of homeownership. Feel free to contact us if you have any questions and we’ll be sure to assist you in determining the right level of coverage for your home.

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