Wondering what hazard insurance is? It’s the part of your homeowners insurance that protects your home from disasters like fire, storms, and theft. Basically, it’s the safety net for big, unexpected events. Usually, hazard insurance is bundled into your homeowners insurance, but let’s break down the details.
Hazard insurance vs. homeowners insurance—what’s the difference?
Hazard insurance and homeowners insurance are closely related, but not quite the same thing. Hazard insurance covers the physical structure of your home if it’s damaged by disasters like fires, storms, or vandalism. Homeowners insurance, on the other hand, also includes coverage for your personal belongings and liability (if someone gets injured on your property). Hazard insurance is just one piece of the overall homeowners insurance package.
Do I need to buy both hazard insurance and homeowners insurance?
If you’re getting a mortgage, you’re going to need both. Lenders want to make sure their investment in your home is protected, so they require hazard insurance to cover the structure. But you can’t just get hazard insurance by itself if you’re financing—the full homeowners insurance policy is required. You could technically have just hazard insurance if you own your home outright, but without homeowners insurance, you wouldn’t be protected against things like theft or liability.
Is hazard insurance different by location?
Yep, hazard insurance isn’t the same everywhere. It’s heavily dependent on where you live. Here’s how location affects it:
- Coastal Areas: If you live near the coast, you’ll likely need extra coverage for hurricanes, storm surges, and possibly flooding (which isn’t included in standard hazard insurance).
- Tornado Zones: Tornado-prone areas like Oklahoma or Kansas tend to have higher premiums due to the risk of severe storms and wind damage.
- Wildfire-Prone Areas: In places like California, or Idaho wildfire risk can drive up your insurance rates significantly.
- Flood Zones: Flooding is never included in hazard insurance, so if you live in a flood zone like Louisiana, you’ll need a separate flood policy.
- Earthquake Zones: If you’re in an earthquake-prone area (like Washington), hazard insurance won’t cover quakes—you’ll need a separate policy for that.
How much will hazard insurance cost me?
Hazard insurance costs vary a lot depending on your location and the risks in your area. Here are some rough estimates by region:
- Coastal Areas: $1,000 – $4,000/year due to hurricane and flood risk.
- Tornado Zones: $1,000 – $2,800/year because of wind and storm damage risks.
- Wildfire Zones: $1,500 – $6,000/year, with higher rates for homes near forests.
- Flood Zones: $1,200 – $4,000/year, factoring in flood insurance, which is a separate policy.
- Earthquake Zones: $1,000 – $3,000/year for hazard insurance, plus another $800 – $2,000 for earthquake coverage.
- Low-Risk Areas: $500 – $1,500/year for areas with fewer natural disasters.
The bottom line
Hazard insurance isn’t just a one-size-fits-all deal. Your location, the risks in your area, and the value of your home all factor into what you’ll pay. If you’re in a high-risk zone, expect higher premiums, and make sure you’re aware of what your policy covers (and doesn’t cover), like flood or earthquake insurance.
If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.