Hazard insurance

Hazard insurance is property insurance that protects the property owner against losses related to the following:

  • Certain natural causes, such as hail, wind, and damage from the weight of snow

  • Explosions

  • Falling objects

  • Fire

  • Malicious mischief

  • Vandalism

If losses are caused by one of the preceding events, then the owner is compensated in cash by the insurer. If a house is situated in a high-risk area (such as a flood plain), then it may be necessary to obtain separate coverage for that specific risk, such as flood or earthquake insurance.

The coverage for hazard insurance is typically included in periodic mortgage payments. This arrangement is required by mortgage lenders, who want to ensure that they are covered against the risk of property damage or destruction. The exact amount of coverage mandated by the lender will be based on its internal risk mitigation rules.

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