Hazard Insurance is a specific type of insurance policy which protects the policy holder’s home against certain hazards. It is also commonly called homeowner’s insurance or property insurance. Depending on the location of the home, the policy may cover a whole host of hazards, from water and fire damage to earthquakes, wind or vandalism. The typical comprehensive package may suit the majority of households, but other potential hazards can be added to a policy further down the line. For example Californians might specifically add earthquake coverage as the risk is higher to them than say somebody living in England. That being said, some homeowners deliberately leave off these potential hazards to save money. One ultimately has to weigh up the risks.
Hazard Insurance is designed with the physical building in mind, and will only cover physical property damage as a result of the hazards in the agreement. A policy will typically not cover any damage due to the fault of the owner, such as cooking accidents or accidental structural damage from extensions etc, or personal property damage, such as dropping a TV. However other policies can be combined, such as contents insurance or accident liability insurance to offer the strongest amount of security.
Although it is not a legal requirement, it is almost impossible to purchase a house or property without taking out some form of hazard or property insurance. Enough insurance must be purchased to cover the cost of the mortgage, so that if the house gets severely damaged, there is enough money to restore it.
Many factors go in to determining the premiums for hazard insurance. These might include the age of the property, the market value of the property, methods and materials used in construction (it may be weak from the beginning) and any common local disasters such as strong winds or earthquakes.