Is Hazard Insurance The Same As Homeowners Insurance?

Is hazard insurance the same as homeowners insurance? If you’re asking that, you’re not alone, it’s one of the most common points of confusion for both new and long-time homeowners.

As someone who’s worked in the insurance industry for nearly two decades, I’ve seen how easily terms like these can trip people up. But misunderstanding the difference can be costly — from delays in mortgage approval to unexpected out-of-pocket repair bills.

In this article, I’ll break down what hazard insurance actually covers, how it fits into a homeowners insurance policy, and when you need each.

Most homeowners policies are divided into sections: one for dwelling (hazard), one for personal property, one for liability, and so on.

Here’s how the two compare:

Contents of Homeowners Insurance Policies

Your homeowners insurance policy is made up of several sections — often labeled Coverage A, B, C, D, and so on. Each section refers to a specific part of your coverage.

Here’s a quick breakdown of what those sections typically include:

• Coverage A – Dwelling (Hazard Insurance): Covers damage to the structure of your home caused by covered perils like fire, wind, and hail.
• Coverage B – Other Structures: Covers things like detached garages, fences, and sheds.
• Coverage C – Personal Property: Covers belongings inside your home (furniture, electronics, clothing, etc.).
• Coverage D – Loss of Use: Pays for additional living expenses if your home becomes uninhabitable due to a covered event.
• Coverage E – Personal Liability: Covers legal costs if someone is injured on your property.
• Coverage F – Medical Payments to Others: Pays for minor medical bills if a guest is injured in your home.

Insurers also classify policies by type using codes like:

• HO-2: A basic “named perils” policy (only covers perils specifically listed).
• HO-3: The most common type, offering broader protection for your home and belongings.

What is Hazard Insurance?

Hazard insurance is the part of your homeowners insurance that protects the structure of your home, the walls, roof, foundation, and anything physically attached — if it’s damaged or destroyed by a covered event like fire, wind, or vandalism.

Think of it like a cake (who doesn’t like cake?): Hazard insurance is the cake itself, the essential foundation. Everything else, like personal property or liability coverage, is frosting, sprinkles, and candles.

Hazard insurance is the primary component mortgage lenders require when you’re financing a home. It’s not a separate policy — it’s included within standard homeowners insurance. When you close on a home, your lender will usually specify how much coverage you need based on the value of the property.

If you own your home outright (no mortgage), you’re not legally required to carry hazard or homeowners insurance — but it’s still smart to have. Without it, you’d need to cover the cost of rebuilding your home entirely out of pocket if disaster strikes.

Once you have hazard insurance, you might assume you’re fully protected. I used to think the same — until I filed a claim and learned that not everything is covered. That’s why it’s so important to understand what your policy actually protects before something goes wrong.

Hazard insurance covers your home’s physical structure against specific perils listed in your policy. Let’s break it down:

Covered Events (Perils)

While policies vary, hazard insurance often covers damage from:

• Hailstorms
• Lightning strikes
• Explosions (like gas leaks)
• Vehicles crashing into your home
• Falling trees
• Vandalism or theft

Covered Structures and Fixtures

Hazard insurance applies to your home’s main structure, including:

• Roof
• Foundation
• Walls
• Doors and windows
• Built-in cabinets or countertops
• Attached garages, porches, or decks
• Permanently installed systems (heating, plumbing, electrical)

Coverage Summary Table

*Unless otherwise stated, hazard insurance only applies to your primary dwelling and its permanently attached parts.

What Doesn’t Hazard Insurance Cover?

Hazard insurance covers a lot — but not everything. Think back to the cake analogy: hazard insurance is the base cake. Anything extra, like frosting or sprinkles, needs to be added separately through additional coverage.

Here’s what hazard insurance doesn’t cover — and what you’ll need instead:

Additional Structures

Hazard insurance only applies to your primary residence. Detached garages, sheds, barns, or guest houses aren’t covered.

To protect these, you need additional structures coverage. Most policies automatically cover these at 10% of your main dwelling limit, but you can increase it if needed.

Personal Property

Your furniture, clothing, electronics, and other belongings aren’t covered under hazard insurance.

To protect the items inside your home, you’ll need personal property coverage, typically included in homeowners insurance. It usually covers 50% to 70% of your dwelling limit.

Loss of Use (Additional Living Expenses)

If your home is damaged and becomes uninhabitable, hazard insurance will cover the repairs, but not your living expenses while you’re displaced.

For coverage of hotel stays, meals, and storage, you’ll need loss of use coverage. It reimburses you (with receipts) for out-of-pocket costs during the repair period.

Personal Liability

If someone is injured on your property and you’re found legally responsible, hazard insurance won’t cover medical bills or legal fees.

You’ll need personal liability coverage to protect against lawsuits, legal defense, and damages. This is standard in most homeowners policies but must be added if you only carry hazard coverage.

Medical Payments to Others

Accidental injuries to guests — like a sprained ankle or cut finger — aren’t covered under hazard insurance.

You’ll need medical payments coverage, which pays for minor medical bills without needing a lawsuit or establishing fault.

Disasters Not Specifically Named

Hazard insurance doesn’t automatically cover every natural disaster. In many high-risk areas, fire, flood, or earthquake insurance must be purchased separately.

According to the Insurance Information Institute, fire and lightning claims average $77,000+ per loss — the most severe among all homeowners claims.

States like California often require separate fire insurance, while flood zones may require NFIP-backed flood insurance.

Water Backup

Hazard insurance usually excludes water damage from sump pump failure, sewer backup, or clogged drains.

To be covered for these events, you’ll need water backup coverage, which can be added as a rider.

Infestations

Rodents, termites, and other pests can damage your home, but they’re not covered under hazard insurance.

This is considered a home maintenance issue, and no standard policy will cover extermination or repairs caused by infestations.

Wear and Tear

Hazard insurance covers sudden and accidental damage, not issues from aging or neglect.

A 20-year-old roof that starts leaking due to age isn’t covered. Regular maintenance is your responsibility.

How Much is Hazard Insurance?

The cost of hazard insurance varies depending on several factors, but in general, it should provide enough coverage to rebuild your home in the event of a total loss. This is often referred to as the replacement cost and may be different from the market value or purchase price of your home.

Hazard insurance is not sold as a standalone policy — it’s included in your homeowners insurance. However, because it’s the portion that covers the structure of your home, its cost is largely influenced by construction-related factors.

Factors That Influence the Cost of Hazard Insurance

Square Footage

Larger homes cost more to insure due to higher reconstruction costs. Insurance carriers base premiums on the total square footage and layout of the home.

Age of the Home

Older homes often cost more to insure due to outdated construction materials or the need for code upgrades after a loss.

Roof Type

The material and condition of your roof significantly impact your insurance premium. For example:

• Asphalt shingles are less prone to fire damage than wood shingles, which may result in lower premiums.
• Metal roofs are durable and may qualify for discounts in certain regions.

Location

Your location plays a major role in determining your premium. Factors include:

• Proximity to coastlines or forests, which increases risk of hurricanes, floods, or wildfires.
• Local building costs, which affect replacement value.
• Crime rates, which may influence your premium if personal property coverage is included.

Average Cost of Hazard Insurance by State

* Premiums are based on a home insured for $350,000. Costs may vary based on local risks, construction materials, and the specific insurer.

However, even if you own your home outright — either by paying off your mortgage or purchasing it in cash — maintaining some form of homeowners insurance remains a prudent financial decision.

Coverage Requirements by Buyer Type

Even when coverage is not mandatory, it still provides meaningful protection against risk. Hazard insurance (as part of your homeowners policy) helps cover the cost of rebuilding your home after a covered event. Other components of the policy, such as:

• Personal Property coverage (to protect belongings)
• Loss of Use coverage (to pay for temporary housing and living expenses)
• Personal Liability coverage (to protect you if someone is injured on your property)

…offer additional peace of mind that goes far beyond the structure itself.

Without insurance, any damage from fire, wind, vandalism, or theft could result in significant out-of-pocket expenses — even total loss — which most homeowners are unprepared to absorb.

In short, hazard insurance is essential if you have a mortgage, but it remains a wise investment for anyone who wants to avoid financial devastation in the event of a disaster.