“Hazard Insurance” is a term used to describe a policy that helps protect your property and valuables from various hazard threats. This can include loss or damage caused by fire, hail, theft, and vandalism. In some cases, it may also refer to coverage for flood damage. While it may sound like a separate policy, what agents and insurance companies refer to as hazard insurance is included in most basic homeowners’ insurance plans.

Any time that you take out a mortgage loan in North Carolina for a new home, you will need to also take out a specified amount of hazard insurance. This helps protect your property from the unexpected while you are still making payments on it.

 

 

Understanding Hazard Insurance in North Carolina

 

 

It is important to understand that hazard insurance and homeowners’ insurance are not two separate forms of coverage. Hazard insurance refers to the coverage your policy provides for damage to the structure of your home.

Why we hear about hazard insurance so much when taking out a new policy is because it is a common term used in both the insurance and lending industry. Most mortgage providers will only issue a loan to new customers if they have agreed to take out a minimum amount of hazard insurance. That is because hazard coverage is the only policy directly related to the structure itself.

This has led to confusion many times as some homeowners believe that they can purchase hazard coverage separately from their homeowners’ insurance policy, which in most cases, is not true. Any time that a mortgage lender specifies that you must purchase hazard coverage, what they are really saying is that you need to purchase at minimum a standard homeowners’ insurance policy.

 

 

Determining the Minimum Amount of Hazard Insurance Needed

 

 

A mortgage lender will require borrowers to take out a minimum amount of hazard insurance. To determine this amount, the coverage is calculated by how old the property is, it’s appraised value, and the level of risk for potential hazards due to crime or inclement weather conditions.

Many homeowners may see hazard insurance simply as a requirement to take out a new mortgage. However, there are benefits to this type of coverage that can save you thousands in repair and replacement costs over time. You may choose only to take out the minimum amount of coverage required by your lender, but keep in mind that the more coverage you have, the less you will have to pay out of pocket if you ever endure a fire, hailstorm damage, or theft.

 

 

Hazard Insurance in North Carolina Covers the Cost of Liability Charges

 

 

In the state of North Carolina, hazard insurance covers more than damage to your home or belongings. It also provides financial  coverage in the event of an accident involving another individual who doesn’t live in the home. Liability coverage can help pay for the medical costs of an injured friend, stranger or a neighbor.

It is impossible to look into the future to see when a disaster will strike. That’s why hazard insurance is such a vital resource that all homeowners should consider, even if they aren’t currently seeking a new mortgage loan. Hazard insurance can help protect against serious threats such as fire, theft, or vandalism. It can also help the financial side if another individual becomes injured while on your property.

Hazard insurance is not a separate policy from homeowners’ insurance. Usually, it is included with most basic home insurance policies. To find out more about the benefits of hazard insurance, contact our team at ProtectiveAgency.com or call (877) 739-9367. Our licensed insurance agents will be happy to answer any questions you have.