It’s about to be summer, and that means it’s time to start thinking about hazard insurance. You’ve probably seen the commercial with a family sitting in their living room, ignoring the flood water that is pouring in through their windows, fireplace, and air vents. Obviously, the commercial does not want you to be as lackadaisical about buying hazard insurance as this family is. But how do you know what kind of hazard insurance you actually need for your new home?
If you’re new to the area, you may not yet know what hazards your home faces. Picking the right hazard insurance can be like picking a home mortgage—there are a lot of jargon words that some unscrupulous companies will try to use to confuse you into paying more. Some insurance companies offer a general hazard policy that covers you no matter what the damage is, as long as it was covered by some kind of hazard. Others, however, will not. Your home likely needs some sort of hazard insurance, but it probably doesn’t need every kind of hazard insurance. Here’s how you can decide what kind/kinds you need:
Ask Your Neighbors
While it might be tacky to ask your neighbors how much they pay for hazard insurance, it isn’t tacky to ask them what kind of hazard insurance they purchased. Especially if they have lived in the area for a long time, they know what kind of natural disasters your city is likely to encounter. For example, in the southwest and west coast, wildfire is a real danger, but isn’t as big an issue on the east coast or in the Midwest, where tornados and flood are more likely.
Ask Your Agent
Don’t be afraid to grill your insurance agent about hazard insurance and what kind you might need. Also, don’t balk from asking to see and itemized list of what a general policy covers, if they offer one. Some hazard insurance policies claim to cover everything but will actually only cover hurricane, wind, hail, and flood damage. Those policies will leave you high and dry if your damage is the result of a fire or earthquake.
Ask Your HomeSure Mortgage Lender
Some lenders want you to have hazard insurance to protect your home, even before you put a down payment on the property. See if this is a requirement for your mortgage before signing your papers. If it is, they can likely recommend which policies/companies you should look into.