The National Association of Realtors recently released a report about the differences between hazard insurance and homeowners insurance.
As articulated, hazard insurance is specifically designed to offer financial security to homeowners in the event of unforeseen disasters. Whereas, homeowners insurance is a more broad-based form of coverage offering hazard protection, as well as protection for personal belongings, liability claims, theft and vandalism.
The scope of coverage provided by hazard insurance typically includes protection against hazards such as fire, wind, hail, lightning and other natural disasters. The association of Realtors listed the following top four reasons to obtain hazard insurance:
• Geographic Vulnerability: Properties in areas prone to natural disasters, such as hurricanes, earthquakes or floods, may require hazard insurance to mitigate financial risks.
• Peace of Mind: Homeowners who seek reassurance against unexpected events may benefit from hazard insurance.
• Property Value Preservation: Hazard insurance may help protect and preserve the value of a property by covering repair or replacement costs in case of damage.
• Customized Coverage: It may be possible to tailor hazard insurance policies to meet the specific needs of homeowners, ensuring they have adequate protection.
Most mortgage companies will require homeowners to obtain insurance coverage as a condition for securing a home loan.
The requirement often includes both hazard coverage and liability protection and is typically integrated into a homeowners insurance policy.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
