Do you have the financial independence to pay for the reconstruction of your property in case it is annihilated by natural calamities? Are you willing to risk owning a property that does not have an insurance policy for such destruction? Do you know that there is actually an insurance that provides refunds for crashed dams, burnt houses, tornado-obliterated properties, and cracked walls or ceiling due to an earthquake?
Yes, there exists such an insurance policy, which is called the Hazard Insurance Policy.
Hazard insurance policy covers natural hazards such as earthquakes, fire, vandalism, and wind. It is also called property insurance. Many homeowners, despite having purchased an insurance policy that completely covers all types of damages, still purchase hazard insurance policies to cover for other specific damages. For instance, for those who live in an earthquake zone, like California, may purchase an earthquake insurance policy.
The coverage of hazard insurance is calculated by how long the building or property has existed, the appraised value, and the natural hazards that could possibly hit it.
Hazard insurance and homeowner insurance, however, are oftentimes taken as one. Homeowners should therefore insure from their insurance broker that they are not paying for redundant policies. Carefully checking a policy’s detailed coverage must be done prior to signing a contract.
Other comprehensive insurance policies, however, being comprehensive by its name, may cover several hazards that a hazard insurance policy does. In such case, purchasing the latter may be cancelled. Unless you want to waste your money on redundant fees for redundant insurance policies, you should not purchase policies of
the same coverage.
Some insurance, however, do not cover such specific damaged properties as a vandalized building while under construction, or a damaged dam. And there are those that cover major damages that are caused by hurricane, flood, and earthquake, but such policies have higher premiums. While comprehensive insurance policies cover both the physical damages and liabilities, hazard insurance policies focus only on the physical property damage.
When the property sale is closing, the owner is required to have a hazard insurance policy. The terms for the coverage of hazard insurance can change to property insurance, and furthermore, to a comprehensive homeowner insurance. But these things only mean one thing to lenders and closing attorneys—that buyers are suggested to buy enough hazard insurance policies to completely cover the cost that the original property owner has spent for the mortgage. Hazard insurance policy, however, is just enough for the policy holder to be able to restore his property in case of distractions brought by natural calamities.
It may sound redundant for a homeowner insurance policy holder to add a hazard insurance coverage, but it really matters. Take for example what happened to North Carolina. Many residents of such place were probably regretful for not having considered rare earthquakes as part of their policy coverage. Good thing there is automatic hazard insurance, where homeowners, despite not having added premiums to their comprehensive homeowner insurance, can still have the damages brought by rare earthquakes to their properties covered by their comprehensive insurance policy.
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