Hazard insurance is a kind of homeowner insurance. Hazard insurance provides coverage for damages caused by factors like natural hazard, physical and accidental damage. This is property insurance which provide compensation to the incumbent for many hazards that damage the house. These perils may be through accident inside the house as a result of house appliances failure like water damages, electrical surges and it covers also those external incidents generated through human malicious effort like theft and vandalism.
This hazard insurance policy varies from country to country and there may be variation in factors for which coverage has been provided. In few countries where natural hazards are more occasional like storms, earthquake and flood, these factors are taken into account while designing hazards insurance policy.
Most prominent factors that are covered in a typical homeowner insurance policy are fire, theft, electrical surges, vandalism, and explosion due to light or fire, damage through wind storm, civil unrest, and violent attack of public due to street crises, snow fall that is damaging the roof of your house.
In Hazard insurance policy, Physical structure as well as your personal belonging inside the house is covered.
The amount provided as compensation for perils damaging personal belonging of the insured person is almost half or more than half of the total amount for which your house is covered. If you are getting $1000 amount as cover for you house, this means for personal commodities, you will have coverage up till $ 500 or little above. There might be a situation when you will find the financial value of your personal belonging more than the value of your house property, you should go and discuss with the insurance agent.
This hazard insurance premium is paid on yearly basis. Exact amount of the insurance premium to be paid is calculated by measuring the appraisal value of the house, its age and construction method and also the frequency and value of know natural hazards customary in that region. Normally this premium amount is 0.5% of your total house cost.
While processing mortgage arrangement to access loan, this hazard insurance is requirement for lender also. This is the security that a lender can demand form the borrower. Lender need to ensure that he/she will be compensated if the mortgage house fell down after the sale. Bank may require the borrower to go for an insurance company for buying the hazard insurance but it is up to the discretion of borrower to go to any insurer. All what is needed to fulfill the condition that the bank or financial institution levy.
Hazard insurance although has cost of time, effort as well as insurance premium that need to be paid annually but its benefits are still value more than its cost.
This insurance provided life time security to incumbent against losses sustained as a result of hazards discussed above.
In case of loss, the replacement value has been provided to rebuild the house and resume to normal routine which otherwise will be a matter of mental, physical and social stress for the victim.