The Difference Between Homeowner’s and Mortgage Hazard Insurance

Buying a new home means purchasing homeowner’s insurance, too, and most premiums are simply added to your monthly mortgage payment. Here’s why some homeowners choose to purchase additional mortgage hazard insurance, despite the additional expense.

What Homeowner’s Insurance Does Not Cover

Homeowner’s insurance is essential not only to satisfy the contract with your mortgage company, but also to protect yourself financially from the possibility of future expenses. However, while damage due to wind and storms is covered, most insurance companies exclude some types of weather or natural disasters from your policy. Depending on where you live, you may not receive compensation if you lose your house to the following events:

  • Sink holes
  • Hurricanes
  • Earthquakes
  • Landslides
  • Wildfires

What Hazard Insurance Covers

Hazard insurance takes over where homeowner’s insurance leaves off. The policy names specific weather events, natural disasters, or human-caused emergency situations, and will cover any damage or loss that happens when they occur. It generally protects only the physical structure of your house, although you can extend it to your home’s contents.

Hazard insurance is additional coverage added on to your regular homeowner’s insurance, rather than a stand-alone policy. You usually have to pay the yearly premium all at once, but the peace of mind it affords is well worth the cost.