Hazard insurance is the part of homeowners insurance that covers you for 'perils' like fire and theft

Homeowners insurance covers damage to your home and personal property, in addition to protecting you, the homeowner, from personal liability. There are limitations to that coverage depending on the type of insurance peril your policy insures against.

Hazard insurance refers to the part of your homeowners insurance that covers damage to your property. The exact coverage your policy offers depends on how it treats insurance perils: either covering only certain perils that are listed, or covering all perils except those that are specifically listed as exclusions.

What is hazard insurance?

Hazard insurance is the part of your homeowners insurance policy that covers your house from insurance perils, things that causes damage to your home or belongings, like theft, fire, or a storm. 

In order for your homeowners insurance claim to be accepted, the damage must be caused by a covered insurance peril or hazard.

A hazard is something likely to cause a peril. For example, a dry Christmas tree can cause a fire hazard triggering a peril (fire). During winter, ice and snow can cause a slipping or tripping hazard, increasing the potential of physical injury. 

A risk increases the likelihood of a peril. For example, hanging heavy Christmas lights on roofs and gutters increases the risk of falling objects.

Hazards covered by homeowners insurance

Homeowners insurance falls in two categories: named peril policies and open peril policies.

Most homeowners insurance policies include named peril coverage only — meaning you're only covered for listed events. Open peril coverage includes named perils and anything not specifically excluded in the policy.

* HO-5 policies are open peril. For HO-3 and HO-7 policies open peril only applies to dwelling coverage

Source: Data from The Zebra and Lemonade

Hazards not covered by homeowners insurance

Earthquakes, floods, government seizures, mudslides, ordinance updates, sewer backups and sinkholes are all perils that won't be covered by homeowners insurance, according to Hippo Insurance. Those will require add-on coverage using a rider policy.

Homes located in disaster-prone areas— hurricanes, tornadoes, and wildfires — will have increased premiums because these types of events are not included in basic coverage and will need to be add-on riders. 

Is hazard insurance the same as homeowners insurance?

Hazard insurance is part of your homeowners insurance that covers you for damage to your property as a result of perils or hazards.

There are three components to homeowners insurance: dwelling coverage, personal property coverage, and personal liability coverage. Additionally, if your home becomes unlivable due to a peril, loss of use or additional living expenses can provide coverage for temporary relocation.

If something happens to your home, you can have it repaired or rebuilt under dwelling coverage. Your dwelling consists of your home and any other structures on the property, like a garage or shed. Personal property coverage includes your furnishings and electronics. Liability coverage protects you if someone is injured on your property and sues for damages.

Damage to your dwelling, personal property, and personal liability must be triggered by an insurance peril or hazard to be a covered event.

Types of homeowners insurance policies

There are eight types of homeowners policies based on the type of home you have, but they all fall into one of two categories: named peril or open peril. 

New construction HO-5 policies have open peril coverage for the dwelling and personal belongings. Standard HO-3 insurance and HO-7 mobile home insurance have open peril coverage for the dwelling only, but personal belongings are covered under named perils.

Townhomes can be HO-3 or HO-6

*Most lenders don't consider this sufficient coverage

**The structure is "open peril," while personal belongings are "named peril"

***Typically for brand-new homes only

****Covered under condo association's master policy

Data from Hippo Insurance

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