Is Hazard Insurance Included in my Homeowners Policy?

Hazard insurance is automatically included in all standard homeowners insurance policies. If your house sustains structural damage after a fire or other covered event, hazard insurance is the portion of your policy that will cover it. Most mortgage lenders require homeowners to have a minimum amount of hazard insurance to get approved for a home loan.

Is Homeowners Insurance the same thing as Hazard Insurance?

When it comes to hazard insurance vs homeowners insurance, many people assume they’re the same thing. But they are not.

Homeowners insurance consists of several types of coverage, and hazard insurance is one of them. Homeowners insurance also contains personal property, liability and loss of use coverage. When you apply for a mortgage, your lender will require you to have a certain amount of homeowners insurance coverage to get approved.

Types of Claim Reimbursement

Deciding on the level of hazard insurance coverage is just one piece of the puzzle when building your policy; it’s also important to understand how you’ll be reimbursed should the worst happen. As you search for a good hazard insurance policy, keep an eye out for these types of reimbursement:

Actual Cash Value

Actual Cash Value will reimburse you for your home’s replacement cost at the time of the loss, minus any depreciation. It’s not the best choice unless you live in a booming real estate area — if property values drop, the amount (based on the home’s value at the time) could be less than you’ll need to repair or rebuild your home.

Replacement Cost Value 

Extended Replacement Cost Value or Replacement Cost Value are safer choices. The replacement cost value is straightforward. It covers the cost of the repair or replacement of damaged property with similar materials and quality without depreciation being deducted. Extended replacement cost adds a set percentage above your policy’s limits to protect you against sudden increases in repair and rebuilding costs. And if a widespread natural disaster happens, it’s likely that repair and rebuilding costs will rise.

Content Reveal: Hazard Insurance covers

  • Lightning
  • Fire and smoke damage
  • Wind damage
  • Damage caused by the weight of snow, sleet, or ice
  • Falling objects
  • Damage caused by vehicles
  • Hail damage
  • Accidental power surges
  • Theft and vandalism
  • Accidental water damage
  • Riots
  • Explosions
  • Volcanic eruptions

Some natural disasters are not covered by hazard insurance, and you need to purchase coverage separately if they’re common in your area.

Content Reveal: Hazard Insurance Does not cover

  • Flood damage
  • Earthquakes
  • Landslides
  • Mudslides
  • Wear and tear
  • Sewer backup

What’s Next?

About the Authors

Elizabeth Rivelli

Elizabeth Rivelli Contributing Writer

Elizabeth Rivelli is a Rhode Island-based copywriter and content marketing consultant. She has expertise writing about home, auto and business insurance, and has been published in widely-read publications, including the Simple Dollar, Bankrate and Decision Data. Elizabeth holds a BA in Communications from Northeastern University in Boston.