Know the Difference Between Hazard Insurance and Home Insurance

Posted on: Feb 25, 2022 | | Written by:

Know the Difference Between Hazard Insurance and Home Insurance

Published on March 11, 2022. EST READ TIME: 3 minutes

Owning a house to one’s name is considered one of life’s biggest achievements. So keeping it safe is vital. For most Indians, the concept of home insurance is still a novel one. Most do not know that just like car insurance, one can also buy insurance for their home? It offers coverage to your home in case of theft, vandalism, natural calamity, or fire. Though a home loan is optional, if you are opting for a loan for your house, you need to have a certain amount of hazard insurance along with the home insurance.

For most Indians, the concept of home insurance is still quite new, and so terms like house insurance and hazard insurance are taken quite literally. Due to this, there may be confusion regarding their meaning and their coverage. But when you invest your hard-earned money in building or buying a home, it is only prudent that you make the right decision about the insurance too. Here is a guide that would let you understand the two concepts better.

Hazard insurance is a part of the home insurance and does not come as a separate cover. Let’s dive deep into the topic and understand the difference between the two.

What is Hazard Insurance?

As the name suggests hazard insurance covers you against all kinds of dangers and perils that can cause a lot of damage. Hazard insurance provides coverage only for the damage caused to the structure of your house, which means, the policy does not cover the contents of the house or injuries incurred by you or your guests while inside the house. Hazard insurance is just one small but vital part of a homeowners policy.

The reason that you might be quite familiar with the term ‘hazard insurance’ is lenders. Your mortgage loan lender might ask for basic hazard insurance before proceeding with the loan because only the hazard insurance loan is directly related to the structure of your home.

What is Covered Under Hazard Insurance?

● Man-made disasters such as vandalism, theft,

● Natural disasters such as earthquakes, cyclones, lightning etc

● Other disasters such as fire, short circuit, burst pipes, vehicles that run into your home, explosion

What is Home Insurance?

Home insurance is an insurance policy that provides all-over coverage, including coverage for hazard insurance. It protects your own or even a rented house along with your belongings present in the house. So, if you wish to extend the coverage to your belongings and injuries incurred in an accident, you can opt for home insurance. All kinds of houses such as flats, independent villas, independent buildings can be covered under home insurance.

What is Covered Under Home Insurance?

● Damage to the structure of the insured home.

● Damage was caused to any of the garments, furniture, and art crafts within the insured home.

● Covers the medical bills of the injured person who was inside the insured building at that time.

Hazard Insurance Vs Home Insurance

Hazard insurance is a part of home insurance. If you wish to protect your house belongings and get medical expenses covered in the event of injury caused inside the house, opting for comprehensive home insurance is best. Hazard insurance only protects your building structure.

If your place has recently from a natural calamity like an earthquake or storm, the premiums would naturally go up for your place. And also the soaring inflation rate can affect the rate of premiums that you are paying now. It is decided after the inspection of your home.

The main differences between the two insurance policies are set in based on the coverage. Here’s how they work-

Reason	Hazard Insurance	Home Insurance
Fire or Smoke	Coverage is offered, some calamities can be an exception	Coverage is offered at no or additional premium
Damage of garments, furniture, devices and books	No coverage is offered.	Contents such as garments, furniture, devices, and books are covered under the insurance.
Damage Caused by Vehicles	Coverage is offered under hazard insurance	It is covered under accidents on the premises
Robbery/ Sabotage	Coverage is provided	Covered on the first-loss basis by most firms
Explosion	It is covered	It is decided after assessment of cause
Damage caused by water heater, air conditioner or in-home sprinkler system	Coverage is offered	It is covered if specifically requested as add-ons
Electricity short circuit/ failure	Electrical failures are covered	Covered if you pay extra premium
Riots	Civil commotion or riot-related damage is covered	No Cover is offered for this

Conclusion

The coverage provided under the insurance policies differs from policy to policy. Hence, read the terms carefully and contact your insurance company before opting for any plan. Simply understand your requirements first. If you have valuables inside your home, you definitely like to invest in comprehensive home insurance that also includes hazard insurance. Having insurance reduces the chance of a home losing value because of any damage or natural calamity. You will need to shop around and compare the two kinds of insurance policies to understand what is and what is not covered under insurance as each company offers slightly different features and benefits.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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