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What is Hazard Insurance? And Do You Need It?

Hazard insurance is a term sometimes used to describe risks covered by a homeowners insurance policy. Covered risks (or hazards) often include damage to your home caused by fire and smoke, theft and vandalism, among others.

Strictly speaking, there is no such thing as hazard insurance. A hazard is a condition that increases the chance of something adverse happening. Ice on the driveway in the winter increases the chance of someone falling and getting hurt. The ice is a hazard. Bald tires and worn-out brakes are hazards. They increase the chances that you could have a serious car accident.

Homeowners insurance is sometimes referred to as "hazard insurance," according to the Consumer Financial Protection Bureau (CFPB). Protection from covered hazards, or perils, are generally included in a standard homeowners insurance policy. Mortgage lenders usually require proof that you have a homeowners insurance policy, says the CFPB.

The point I'm making is that you don't buy insurance against hazards. Hazards are conditions that increase the chances that you'll use your insurance. Hazards, in other words, are things to minimize or avoid if you can.

I should say, however, that I have seen the term "hazard insurance" used incorrectly on mortgage loan applications. If that's where you're seeing it, yes; it does mean homeowners insurance. The financial institution is looking for proof that you have your home insured and that its interest is protected.


Homeowners insurance includes three types of protection against covered perils (or hazards): dwelling coverage, other structures coverage and personal property coverage. These coverages may help pay to reimburse you for covered damage from perils such as:

  • Fire and smoke
  • Wind
  • Hail
  • Explosions
  • Theft
  • Vandalism
  • Falling objects
  • Damage caused by the weight of snow, sleet, or ice 
  • Water damage caused by a household appliance or burst pipe
  • Power surges
  • Civil unrest or riot

It's important to remember that not all insurance policies are the same. Be sure to read your policy or check with your agent to learn what risks may or may not be covered by your policy. For example, damage caused by floods and earthquakes are typically not covered by homeowners insurance.

Protection against covered perils typically extends to both the physical structure of a home as well as the belongings you keep inside. Here's an overview of how a typical homeowners insurance policy may help protect you from perils such as the ones listed above.

Dwelling coverage. The physical structure of a home is protected by dwelling coverage. For instance, if fire damages your walls or hail damages your siding, this coverage may help pay to repair the damage.

Other structures coverage. Homeowners insurance typically extends to structures other than an actual home. If you have a fence, shed or detached garage on your property, you may find insurance will help pay to repair or replace them after a covered loss.

Personal property coverage. Personal property is a term used to describe your belongings. Suppose your television is stolen or your furniture is damaged by a fire in your home. This coverage may help pay to replace items damaged or destroyed by certain perils.

It's also important to understand that each coverage has a limit, which is the maximum amount your insurer will pay toward a covered loss. Any expenses beyond your coverage limit are your responsibility. Your insurance agent can help you raise or lower your coverage limits to suit your needs.

Have questions about insurance may help you should the unexpected occur? Contact CIS Insurance Agency for help crafting a homeowners insurance policy that fits your needs.