Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .

Top Stories

Understanding Hazard Insurance

Understanding Hazard Insurance

Hazard Insurance is a term associated with home loans/immovable property. Let us understand the term in totality by breaking it down into parts…

Hazard means risk of any type. This risk may relate to occurrence of natural calamities like earthquake, flood, and severe storms including hail storm or any other natural disaster. The risk may also relate to naturally occurring fires, theft and vandalism. The definition of hazard/risk may vary depending upon where the property is situated.

Insurance as we all know can be understood as an activity that helps you stand in the same capacity after the occurrence of unfavourable event, as before. You are compensated for all the loss covered under the terms of the insurance. Insurance policy is a legal contract between the insured named in the policy and the insurer (the company giving insurance coverage)whereby the insurer promises to make good the financial loss suffered by the insured , due to occurrence of the events mentioned in the contract.

From the above discussion it is clear that hazard insurance is a phenomenon whereby loss occurring due to damage to the your property (basically home) is made good for , making you stand in the same financial position as before.

When we talk of hazard insurance we basically are referring to home insurance. The homeowner’s insurance policy has the coverage for common hazards as already discussed above. Any specific hazard coverage of which may be required depending upon the location of property, has to be specifically insured against through hazard insurance.

Need for hazard insurance

Hazard Insurance is generally required by lenders of home loans at the time of giving you loans for your new home. This assures them that in the event of occurrence of any untoward incident damaging the structure of your home (called hazard here) his loan amount would be made available to him through the proceeds of insurance.

Importance of hazard insurance

Home is one of the basic necessities for every person and so protecting it against a hazard becomes very important. Hazard insurance is of utmost importance for the lender of the home loan as for you as a receiver of the home loan as it provides coverage for the structure of the home for which the loan is being taken. Although provision of home insurance is a global phenomenon, the term hazard insurance is used mainly in case of India. In other countries, insurance for the structure automatically forms the part of home insurance policy.

Coverage

Hazard insurance, sometimes referred to as dwelling coverage, covers natural or man-made perils causing damage to the structure of the home. Such perils may include fire, natural disasters, robbery, sabotage, blast, and damage caused by fixtures like air conditioner, geyser, etc.

How is hazard insurance different from home insurance?

The difference lies in the basic coverage being offered by the two. Whereas hazard insurance covers only the building of the home, home insurance provides coverage under following areas –

  • Hazard/building insurance – insurance for the structure or the building
  • Liability insurance – coverage against the liabilities arising out of injuries happening on the property
  • Contents insurance – coverage against the damage to personal belongings existing in the home

Sometimes coverage is also provided for cost of alternative accommodation in case named peril damages the house.

However, type of coverage differs with respect to the type of policy taken by the insured.

Thus, hazard insurance has narrower perspective than home insurance.

Global Banking & Finance Review

 

Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!


By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post