Hazard insurance

What is hazard insurance?

Hazard insurance refers to the part of a homeowners insurance policy that covers the home's structure against specific risks or hazards like fire, wind, hail, lightning and other sudden events. It protects the dwelling itself, not your belongings or liability and is typically included in the dwelling coverage (coverage A) of a standard homeowners policy. It also extends to protect other nearby structures such as a detached garage or shed, not just the main house.

How hazard insurance works

If a covered hazard damages or destroys your home, hazard insurance helps cover the cost of repairing or rebuilding your home. After you file a claim and pay your deductible, your insurance company pays up to your policy limit, usually based on your home’s replacement cost.

Hazard insurance doesn’t cover all risks by default, but you can add endorsements for extra protection. This can include coverage for damage caused by various perils.

Why lenders require hazard insurance

If you have a home loan, your lender will usually mandate hazard insurance as a mortgage requirement to protect their investment in your home. This makes sure that if your home is damaged by a covered hazard, there’s funding to rebuild it. This protects both you and the lender.

Is hazard insurance a separate policy?

No, hazard insurance is not a standalone policy. It’s built into most standard homeowners policies as part of the dwelling coverage. You don’t need to buy it separately unless your lender specifically requests proof of the hazard coverage component. That’s because hazard insurance is usually part of your homeowners policy. A VIU by HUB Advisor can help explain how it works.

What does hazard insurance typically cover?

Hazard insurance generally protects the structures on your property such as the walls, roof and foundation. It is designed to step in when sudden and unexpected events cause physical damage to your home. Common examples of these events include hazards such as:

• Fire and smoke
• Lightning strikes
• Windstorms and hail
• Explosions
• Damage from vehicles or aircraft
• Theft or vandalism
• Falling objects
• Snow, ice or sleet damage
• Volcanic eruptions

These hazards can cause serious damage and hazard insurance helps cover the cost of repairing or rebuilding. Each policy varies so check with your insurance advisor for specific covered perils.

What does hazard insurance not cover?

Hazard insurance doesn’t cover everything, and knowing the gaps is just as important as understanding what is protected. Some risks are simply excluded because they require separate or specialized coverage. There are certain risks that are not included such as:

• Flood damage – Floods require separate flood insurance. The National Flood Insurance Program is a key provider of flood insurance, safeguarding properties against flood-related damage.
• Earthquake damage – Earthquakes require an endorsement or separate policy.
• Sewer or water backup – You can usually get add-on coverage for this.
• Wear and tear or maintenance issues – These are the responsibility of the homeowner.
• Mold – Mold caused by a covered peril is covered, but typical mold damage is not.
• Pests like termites or rodents – Homeowners are responsible for these issues.

Also, hazard insurance doesn’t cover personal property or liability. Those are different parts of your homeowners policy. However, homeowners insurance may offer additional living expenses coverage if your home becomes uninhabitable due to a covered loss, helping you pay for temporary housing and related costs.

Types of hazard insurance coverage

There are two main policy types to be aware of, and understanding the difference can help you choose the right protection for your home. Each type defines how risks are covered and what situations will be excluded from your policy. Here are the two most common types:

• Named perils coverage – Only covers hazards specifically listed in your policy.
• Open perils (all risk) coverage – Covers all risks except those explicitly excluded.

Open perils policies offer broader protection but usually come at a higher cost. This helps protect against various risks that could impact your property.

How much hazard insurance do you need?

You’ll want enough hazard insurance to rebuild your home from the ground up including labor, materials and debris removal. Without this coverage, the financial burden of rebuilding could be overwhelming. A VIU by HUB Advisor can help calculate this based on your home’s:

• Square footage
• Construction materials and features
• Local rebuilding costs
• Age and condition

Having enough hazard coverage helps make sure you can afford to rebuild if your home is damaged by something like fire, wind or hail.

When to review or update your hazard coverage

It’s a good idea to review your coverage regularly instead of waiting until after a loss. Your insurance needs can change over time as your home’s value, condition and rebuilding costs shift. To stay protected, make it a habit to check your coverage in situations like:

• When you renew your policy each year
• After major home improvements or renovations
• If local construction or labor costs rise
• After inflation or a natural disaster in your area

Additionally, consider other natural events that could impact your property such as severe storms or floods.

Make sure your dwelling limit still reflects what it would cost to rebuild. A VIU by HUB Advisor can help you review and update your hazard coverage to make sure it still fits your current needs.

How to file a hazard insurance claim

Filing a claim quickly and carefully makes a big difference in how smoothly the process goes. Acting right away helps prevent further damage, speeds up your payout and gives you a clearer record of what happened. It can feel overwhelming after a major loss, but following a few clear steps will help you get back on track.

If your home is damaged by a covered peril follow these steps to file a claim:

1. Take photos or video of the damage incurred
2. Prevent further damage if it’s safe to do so
3. Contact your insurance company or VIU by HUB Advisor
4. Submit your claim and documentation
5. Work with an adjuster on the inspection
6. Receive a payout based on your deductible and policy limits

Keep records and receipts throughout so the process goes smoothly and you get your reimbursements quickly and easily.

Do you need hazard insurance?

If you own a home, especially if you have a mortgage, you probably already have hazard insurance through your homeowners policy. But it’s still worth checking your coverage to make sure it’s enough to fully rebuild if the unexpected happens.

Even if you don’t have a mortgage, obtaining insurance is generally advised to protect your investment. Hazard insurance helps you avoid big out-of-pocket costs if something unexpected happens.

Hazard insurance FAQs

Is hazard insurance tax deductible?

Generally, hazard insurance is not tax deductible. Consult a tax preparer for personalized advice.

Is catastrophe insurance required?

Catastrophe insurance is a standalone policy specifically designed to cover certain disasters including man-made events. It is not typically required by lenders but may be advisable depending on your location and risk factors.

Does hazard insurance cover personal belongings?

No, hazard insurance only protects the physical structure of your home and other attached or detached buildings. Your personal property like furniture, clothing and electronics is covered under the personal property section of your homeowners policy.

Can I increase my hazard insurance coverage?

Yes, you can typically adjust your dwelling coverage to better match your home’s replacement cost. If you renovate, add an addition or if local building costs rise, you may need to increase your coverage to avoid being underinsured.