What is hazard insurance?

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Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states.
After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insu…

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Rachael Brennan

Licensed Insurance Agent
Rachael Brennan

UPDATED: Mar 21, 2022

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Here's the Scoop

  • Hazard insurance is required to qualify for a mortgage
  • Your home insurance policy includes hazard insurance
  • Some hazard insurance coverages won’t have flood insurance

Did you know hazard insurance is necessary to qualify for a mortgage? Hazard insurance is one of the essentials of homeowners insurance coverage.

So how do you get hazard insurance, and how much does it cost? Don’t worry – we’re here to help.

Our guide explains what hazard insurance is, how it works, and why it’s different across the United States.

Keep reading to learn more about hazard insurance options for your home. If you want to shop for insurance right now, enter your ZIP code in the free online quote tool to compare multiple quotes from companies in your area.

Table of Contents

What exactly is hazard insurance?

Homeowners who want a mortgage must have hazard insurance, which consists of disaster protection coverage to pay for any damage that affects the structure of your home.

Homeowners insurance includes hazard insurance, but people often mistaken it as optional insurance coverage. Most mortgage lenders have hazard insurance as the minimum requirement to qualify for a mortgage.

Some lenders offer your mortgage and home insurance simultaneously, but your monthly payments would be more expensive.

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What does hazard insurance cover?

Hazard insurance is similar to comprehensive car insurance, except it covers unforeseen incidents to your home’s structure. So what are those incidents?

Here’s what hazard insurance covers:

  • Fallen objects like trees, limbs, and walls
  • Explosions
  • Theft
  • Power surge
  • Vandalism
  • Riots
  • Fire damage
  • Smoke damage
  • Wind damage
  • Hail damage
  • Winter weather damage such as ice, sleet, and snow
  • Water damage from burst pipes or appliances

Check your homeowners insurance policy to see if it covers anything else. Some home insurance companies cover more damage types.

Does hazard insurance cover damage to a garage?

Yes, it does. Dwelling and other structures coverages protect your garage. Often, home insurance policies include these coverages to cover hazards that may or may not be a part of your home but are on your property.

Dwelling and other structures protection can also cover detached garages, fences, sheds, and other property. However, they may not cover damage to your vehicle.

You’ll need to use your car insurance to pay for any damages to your car.

Can hazard insurance cover personal items?

Yes, it can. Most home insurance policies include personal property coverage, and it can cover you when your personal property gets damaged or stolen.

What doesn’t hazard insurance cover?

Hazard insurance may not cover flooding or earthquakes, meaning you’ll need insurance to cover damage from those specific incidents.

Some areas are prone to specific damage. For instance, a California insurance company may lean toward covering wildfire and mudslide damage under hazard insurance, and they could have winter storm damage as optional coverage.

Check out America’s best flood insurance companies if you want to buy flood insurance.

How much is hazard insurance per month?

Since home insurance policies require hazard insurance, it is included in the monthly rate. Let’s look at the cost of homeowners insurance by state.

Average Homeowners Insurance Rates

States Average Annual Home Insurance Rates Average Monthly Home Insurance Rates
Virginia $1,057 $88
New York $1,068 $89
California $1,127 $94
Ohio $1,164 $97
Alaska $1,171 $98
Maryland $1,191 $99
West Virginia $1,192 $99
Indiana $1,195 $100
Connecticut $1,208 $101
South Carolina $1,235 $103
Rhode Island $1,261 $105
Arizona $1,269 $106
Michigan $1,288 $107
Massachusetts $1,323 $110
Iowa $1,371 $114
North Carolina $1,409 $117
Illinois $1,436 $120
Georgia $1,445 $120
Florida $1,637 $136
Alabama $1,668 $139
Tennessee $1,745 $145
Missouri $1,794 $150
Texas $1,846 $154
Mississippi $1,860 $155
Louisiana $1,874 $156
Minnesota $1,877 $156
North Dakota $1,898 $158
Colorado $1,899 $158
Montana $1,957 $163
South Dakota $2,126 $177
New Mexico $2,134 $178
Kentucky $2,174 $181
Arkansas $2,291 $191
Nebraska $3,234 $270
Kansas $3,288 $274
Oklahoma $3,482 $290
Hawaii $383 $32
Vermont $665 $55
Utah $706 $59
Delaware $732 $61
New Hampshire $739 $62
Oregon $756 $63
Pennsylvania $758 $63
New Jersey $793 $66
Nevada $852 $71
Wyoming $870 $73
Washington, D.C. $893 $74
Wisconsin $933 $78
Idaho $934 $78
Maine $951 $79
Washington $964 $80
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Virginia has the cheapest home insurance rates in the United States on average, and Washington state has the most expensive. Hazard insurance doesn’t come with extra costs, but you’ll pay more for home insurance if you want to add more coverage.

Is there a deductible for hazard insurance?

Yes, there is. You’ll need to pay a deductible to receive a claim from your home insurance company. Homeowners can choose the deductible they want at the start of the policy.

Higher deductibles can get you cheaper home insurance rates, but lower deductibles raise your monthly payments. You’ll also need to choose a coverage limit, affecting how much you pay for homeowners insurance.

Which home insurance coverages are optional?

Hazard insurance won’t cover everything in your home. Therefore, you’ll need to explore other coverage options to get coverage for your yard and other specific situations not covered by hazard insurance.

Here’s a list of coverages you may want to add to your policy:

  • Business property. Your home insurance company covers business property you’ve stored at home.
  • Earthquake insurance. This coverage option pays for damage caused by an earthquake.
  • Flood insurance. This policy covers flood damage to your home.
  • Green improvement reimbursement. The home insurance company reimburses you for replacing damaged or destroyed property with environmentally-friendly items.
  • Identity theft restoration protection. If someone steals your identity, your insurance company covers lost wages, legal fees, and other essential costs.
  • Water backup. This coverage pays for water damage if a drain clogs or breaks.
  • Yard and garden. Your home insurance company covers damage to trees, plants, and even lawn equipment.

Electronic data recovery may also be helpful. Lately, more people work from home, and a power surge won’t cover computers or other devices. Coverages like electronic data recovery can be helpful.

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Hazard Insurance: The Bottom Line

You must carry hazard insurance if you want to buy a home. Just as liability coverage is the minimum for car insurance, hazard insurance is a must for homeowners insurance.

However, hazard insurance is different in each state. Some areas require flood insurance, while others require hurricane or earthquake insurance.

Any additional coverage will increase your monthly rates, but we recommend buying optional hazard insurance coverages to cover all your bases.