Hazard Insurance
Definition of "Hazard insurance"
There’s a lot of confusion regarding the hazard insurance definition. Many people think it’s a synonym for homeowners insurance but they’re wrong. Hazard insurance is actually part of the homeowner’s insurance policy.
Hazard insurance refers to one of the coverages within homeowner’s insurance; the protection against perils like fire, severe storms, wind hails and other natural events to the dwelling. Whatever happens to the structure is considered hazard insurance. That is; the other parts covered by the policy – like liability insurance and personal property insurance – are not considered hazard insurance.
But it is more than that. Flood insurance and Earthquake insurance, for instance, are not typically included in a homeowner’s insurance policy and are considered hazard insurance. So it’s fair to say that hazard insurance is a definition of a type of peril to your home that can be insured, and that peril is natural hazards from the outside world to the structure of your property.
While it is in the owner’s best interest to preserve his interest in the house with this type of insurance, it’s the mortgage companies who require this policy most of the times. Here’s why: an accident inside the house, for instance, will hurt the homeowner financially and, in the long run, that’s bad for the lender, but not immediately. However, a hazard to the structure is immediately bad because it devalues the home. If the owner doesn’t fix it and later on defaults and the house goes on to foreclosure, the lender will now potentially have a house that’s worth less than what he borrowed –making the lender unable to recuperate the investment.
Real Estate Advice:
We understand there are a lot of insurances out there and it feels like it’s draining your money away. But there’s nothing more dangerous than living without coverage and 10 out of 10 real estate agents will tell you this one is the most important one. After all, if you don’t protect your asset, in the case of an accident it will literally make you lose a lot of money.
Popular Real Estate Terms
Reduction of part of the balance of property by charging an expense or loss account. The reason for a write-down is that some economic event has occurred indicating that the asset's value ...
An interior wall dividing an area into two or more rooms or separate areas. The division of real estate between owners giving each an undivided interest. ...
Misuse, alteration, destruction, or neglect of land by an individual right-fully in possession that breeds a significant and permanent reduction of its value to the legal interest owned by ...
Expected period of benefit used to depreciate business property, plant, and equipment. The guidelines may be developed by the industry or Internal Revenue Service (IRS). ...
Window having several overlapping glass louvers that are installed in a common window frame and pivot synchronously as a window lever or crank operating device, installed at the bottom of ...
A will where the decedent's nomination of an executor/executrix is flawed, requiring an administrator to be appointed by the court and annexed to the will. ...
An increase in the price or market value of real estate. ...
Money raised by a syndicate promoter and placed into a fund prior to selecting the specific property in which funds will be invested. ...
Prevalent type of property taxes assessed on real estate. It is usually collected by the local government and distributed among agencies to finance services. ...
Have a question or comment?
We're here to help.