Hazard Insurance vs. Homeowners Insurance

Homeowners insurance doesn't cover certain potential hazards.
i Michael Blann/Digital Vision/Getty Images

Purchasing a home can be one of the most important financial decisions you make, and protecting that investment requires purchasing adequate insurance to cover any potential losses. Banks and mortgage lenders often set minimum requirements for homebuyers. While basic homeowners insurance will pay to replace structural and personal losses under certain circumstances, hazard insurance can provide an additional safety net.

Basic Policies

Basic homeowners insurance policies vary among companies. Some basic policies provide coverage for losses due to theft, vandalism, broken water pipes and fire. The liability portion of your insurance coverage helps protect you from financial losses if individuals suffer accidents requiring medical attention while on your insured property. Basic policies do not cover flood damage, and many won’t pay for damages due to wind, hail or earthquakes.

Risk Factors

Depending on your potential risk factors, you may require coverage beyond what's in your basic policy. If you live in an area that's likely to experience flooding or severe winds, you may need specific types of hazard insurance. Your mortgage lender may require such additional coverage if you home is in a high-risk area.


Insurance companies offer additions to basic policies, known as riders or peril-based policies. These additions allow you to choose what types of additional coverage you may require. The National Flood Insurance Program provides insurance coverage for flood damage. Your insurance company may offer this coverage as a rider, or you may obtain it through your local Federal Emergency Management Office.


Examine your homeowners policy to determine what type of hazard insurance your policy provides. Look under the exclusions section of your policy for a listing of damages that aren't covered. If you live in a floodplain or in a region that frequently experiences strong storms, you may wish to purchase additional coverage. Discuss your policy with your agent to determine what types of insurance riders you may add to your basic homeowners policy.

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