What is hazard insurance coverage and when is it required?
Hazard insurance coverage is insurance to cover for damages caused by fire, vandalism or natural disaster – flood, earthquake, and storms. It can also be called homeowners’ or property insurance. Natural disaster events are often excluded from a common insurance policy and coverage for them is sometimes required to add separately. Often properties in high-risk areas will have events specifically excluded from a typical homeowners’ or property insurance. For example, in a flood-prone area flood insurance will be offered separately to you. Generally, the owner chooses a comprehensive insurance policy first – it will cover most common hazards and sometimes additional hazard coverage is not necessary. However, sometimes certain hazards are not covered . When closing on a sale, the borrower is asked to get some hazard insurance and is often asked to pay one year’s hazard / homeowner’s insurance premiums. Borrowers are strongly encouraged to get as much insurance as to cover mortgage amount
