Find out what hazard insurance and a homeowners’ insurance mean and the difference between them.
Did you know that you can purchase an insurance policy for your home? Just like a car insurance covers damages to your car by paying for any repair jobs, a home insurance offers coverage to your home in cases of fires, natural calamities, vandalism and theft. A home insurance policy helps you keep your home secure and ensures that you have a roof over you and your family’s head even when there is structural damage to your house. Home insurance is usually optional, but if you are taking out a loan for your home, then the lender requests a homeowners’ insurance before they approve your loan.
Whenever a home insurance is discussed, there are two terms that always get thrown around a lot. They are, the hazard insurance and the homeowners’ insurance. Let’s take a look at what these two terms mean.
Hazard Insurance
A hazard insurance is a type of insurance that covers your home structure from many different types of hazards, like fires, earthquakes, vandalism, etc. However, a hazard insurance covers damage only to the house, or the structure of the house and not the contents within the house. A hazard insurance is just one part of a comprehensive homeowners’ policy.
Hazard insurance covers:
- Fire
- Earthquake
- Cyclone
- Theft
- Vandalism
- Short circuit and other electrical failures
- Water damage due to leaky or burst pipes
What is homeowners’ insurance?
A homeowners’ insurance coverage is a comprehensive insurance for your home that covers many areas, hazard insurance being one of them. Usually, money lenders insist on just a hazard insurance since that is what the loan is actually for. One may, however, go for a full homeowners’ insurance if they feel they would like extended protection for their belongings as well.
What does homeowners’ insurance cover?
The types of hazards in insurance of this type is similar to hazard insurance, like structural damage due to fire, earthquakes or explosions. In addition, it also covers:
- Damages to garments, furniture and artefacts within the insured home
- Medical bills of injured persons within the insured home at the time of unfortunate calamity or hazard.
The minute details of the hazard, as well as the specific hazards included in your insurance policy will differ from policy to policy. Contact your insurance company and read the terms carefully to see what is included and what is not.
Thus, a homeowners’ insurance policy basically covers your house against structural damage while providing additional coverage for belongings. Most homeowners have a single home insurance policy that also includes a hazard insurance. In some cases, money lenders may ask you to get a supplemental hazard policy if they feel your current homeowners’ policy does not cover some hazards.