When you buy a home, do you ask how much does hazard insurance cost? If you don’t, then you really should. You never know when tragedy may strike your home, even if you live in a safe gated community. Many people purchase homeowner’s insurance with a specific exclusion for risk factor, which means that they are covered for certain disasters, but not all. In some cases, this disaster exclusion clause is extremely important, as it can protect you from excessive out-of-pocket expenses if you are harmed or your property damaged because of the excluded hazard.
The short answer is: it depends. You have to shop around for homeowners’ insurance that contains the right hazard coverage for what you want. Your coverage will be worthless if it doesn’t include tornado damage or you’re in Tornado Alley and don’t get supplemental earthquake coverage, nor will it matter if you live in California and skip supplemental flood insurance. It’s imperative that you understand and fully comprehend the terms and conditions of your homeowners’ insurance policy, including any limitations, restrictions or exclusions.
Some of the more common perils covered by insurance companies’ policies include: fire, smoke, explosion, lightning, water, wind, earthquake, vandalism, theft and burglary. The amount of coverage that you receive will depend on the common perils listed above. You can learn more about your insurance options, including common perils not covered by all insurers and their definitions of additional risks, by reviewing an insurance company’s brochure or by contacting the Insurance Information Institute.
If you’re a property owner, you are responsible to yourself for expenses resulting from injury or damage caused by your own negligence or that of others. Policies differ among insurance companies regarding which incidents are covered under the homeowners insurance policies. In fact, homeowners insurance policies can cover many types of incidents other than those mentioned above, so you should review your coverage options. For example, your policy may provide coverage for damage caused by a child’s carelessness, but not for flooding caused by excessive rainfall. (Read your policy carefully.)
Homeowners insurance provides the coverage you need to alleviate the financial loss due to any occurrence that makes your dwelling uninhabitable. This might include but is not limited to, fire, wind, lightning, explosion, vandalism or theft. Your homeowner’s insurance company will take into consideration such events that cause greater damage to your dwelling than ordinary occurrences. So when considering whether to purchase a policy, you should know how much the total cost would be if one or more of the disasters detailed above occurred. Assess how long it will take you to recoup your losses. A higher replacement cost might be better suited to meet your budget constraints.
Some homeowners policies provide coverage in the event of a disaster for only one part of the dwelling. Usually, this occurs if a part of the home has a history of flooding. If your dwelling is not near a body of water, it probably does not require additional coverage. However, it may be wise to double-check with your insurer because the likelihood of flooding in your area may be greater than you think.
Two additional factors that influence the amount of your homeowner’s insurance premium are the age of the victim and the location of the incident. Most policies cover open perils as long as they occurred in your state. For instance, if you die in Texas due to an accidental drowning, your family would probably obtain full compensation. Therefore, policies cover open perils wherever the incident occurred. As long as the victim was a resident of Texas at the time of the incident, your beneficiaries should obtain full compensation regardless of the location of the incident.
One thing that many people are unaware of is the fact that there are two parts to home insurance policies. While flood, smoke, and hail damage are covered individually by some policies, another type of peril is liability perils. Liability perils occurs when someone is injured while entering or exiting your property. This form of peril is usually not covered by flood or fire damage policies. Therefore, if you do not have additional coverage for liability perils, it may be wise to purchase additional hazard insurance in order to provide coverage in the event of one of these types of incidents.