Hazard Insurance: What You Need to Know (Without the Confusion)
As soon as your offer to purchase a home is accepted, you'll want to start shopping for Hazard Insurance.
If you’re wondering what it is—don’t stress. Let’s keep it simple.
What is Hazard Insurance?
Hazard insurance protects your home from things like:
Fire
Storms (wind, hail, lightning)
Theft or vandalism
Explosions
Some water or ice damage
If something happens, hazard insurance helps pay to fix or rebuild your home.
Important: Hazard insurance is usually part of your homeowners insurance policy—you don’t need to buy two separate policies.
Why Do You Need It?
If you’re getting a mortgage, your lender will require hazard insurance.
It protects their investment (and yours) in case something unexpected happens.
Even if you’re buying with cash, having insurance is a smart move. One accident could cost you way more than the price of a policy.
What’s the "One-Year Rule"?
Before you can close on your loan, you’ll need to pay for the first year of hazard insurance upfront.
You’ll see this listed under "prepaid items" on your closing documents.
It’s a required cost—but it makes sure your home is protected from day one.
How to Pick the Right Policy
Here’s a simple game plan:
Get quotes from 3–5 insurance companies
Check what hazards are covered
Compare monthly payments and deductibles
Tip: A higher deductible usually means a lower monthly payment—but make sure it’s an amount you could actually afford if you needed to use it.
Also, standard hazard insurance won’t cover floods or earthquakes—you may need extra coverage depending on where your home is.
Is Hazard Insurance Tax-Deductible?
Usually, no—unless the property is a rental or investment property.
When in doubt, ask your tax advisor.
The Bottom Line
Hazard insurance isn’t just another box to check—it’s real protection for your home and your wallet.
Here’s what to remember:
It covers damage from common risks like fire, storms, and theft.
It’s required if you’re using a mortgage.
You’ll need to prepay a year’s worth at closing.
Shopping around can save you money.
Need help finding the right hazard insurance?
We’re here to make it easy.
Reach out anytime, and we’ll guide you through it!