Introduction
Hazard insurance is a form of insurance that protects the property owner from the loss of property caused by fires, earthquakes or other natural calamities. Hazard insurance is also known as Homeowner’s insurance or more commonly just home insurance. It is important on the part of the home owner to have his house insured against any natural or other mishaps. Although the type of insurance is not mandatory for the home owners in many countries, it is still advised to possess one as it ensures the mental peace and the insurance of the wealth of the individual is protected.
History
But before opting for a Hazard Insurance, there are a few things that one must keep in mind. One should understand the various types of insurance packages that the various insurance companies offer before selecting the best one that suits them. If you have bought your home from the finance of a moneylender, it is required for you to comply with the norms set by the lender. Most lenders require the homeowners to have at least a minimal amount of Hazard insurance covering damages caused by wind, fire, hailstorm etc.
Basically, there are three levels of coverage in hazard insurance and it is vital that one knows all the three before committing to the one that suits them the most. The first level of hazard insurance is actual cash value. This value covers the whole house together with your personal belongings. Replacement cost is the second type of coverage which is again the total cash value but without depreciation as a factor. The third and most comprehensive type of coverage is guaranteed replacement cost, also called extended replacement cost. This allows for coverage of costs even if it exceeds your policy limit.
Features
The cost of insurance is also something that the home owners should be aware of. Often, the premium of the house is based on the cost of the property, i.e. the more expensive the property, the more premium you might have to pay. Also the premium of hazard insurance of a house depends upon its geographic location. If your house is located in an area frequented by earthquakes, hurricanes or other natural hazards, it is quite possible that you might have to shell out more money to keep it insured. Also, houses close to fire hydrant and fire stations tend to have lower insurance payments as they are considered to be relatively safer than the houses farther from the fire station. The cost of insurance is also dependent on the level of coverage you choose, the amount of liability protection and the value of your personal belongings.
Tips and comments
One of the biggest decisions associated with buying the hazard insurance, or any insurance for that matter, is of choosing the right company. It is a good idea to obtain quotes from more than one company and make a comparison of the coverage level and the liability coverage and the returns they offer in case of a mishap. Always remember to read the fine print on the policy details to safeguard yourself against any losses not being covered by the insurance company too. Make sure that the the company you intend to buy insurance from is licensed by contacting your state’s insurance department. Before making the final decision, always check for referrals and experiences from other consumers.
