Hazard Insurance Explained
Hazard Insurance insures against losses associated with damages to property as a result of natural events like fire, severe storms, earthquakes etc. As per the policy terms, the property owner will receive compensation in the case of any damage to the property due to events covered thereunder. Generally, the property owner is required to pay insurance premiums mostly, biannually, or annually as per the terms of the policy.
A Little More on Hazard Insurance
Generally, the owner’s generally policy will not cover all the events which might damage to the property. Many contingencies require a separate insurance policy. This is especially true in high-risk areas. For example, Florida is a high risk zone as it is prone to hurricane. A homeowner in Florida would need to take out an additional policy, such as a flood insurance policy, to cover potential damages in case of flood or hurricane.
Homeowners should ensure that their insurance policies cover all the potential hazards which are potential risks to their house. If the house is being given on mortgage, the lender will require a certain level of insurance coverage to protect its investment. This will also depend upon the local municipality laws and requirements.
The amount of insurance required will depend on the cost of the house and money required to repair/re-build the house in the event of damage or destruction. This rate is impacted by current real estate market, but it may vary significantly from the current value of the property. Typically the policies last for a year and are renewed annually. The lenders generally require that a portion of the policy cost and other taxes are included in the monthly rent of the property if it is mortgaged.
References for Hazard Insurance