What are perils and hazards?
In the world of insurance, a “peril” is an event or circumstance that results in property damage. Your homeowners, condo or renters policy contain a list of covered perils, such as fire, lightning and vandalism. That means your insurer will pay to repair, replace, or rebuild your home or property if a covered peril causes damage. A “hazard” increases the chances of a peril occurring.
Difference between perils and hazards on a home policy
Simply put, a peril is the cause of the loss and a hazard increases the likelihood of a peril happening. Perils and hazards are mistakenly interchanged when discussing home insurance. They aren't synonyms. Lenders have popularized the term “hazard insurance,” which creates confusion as to the definition of a hazard.
For example, a fire begins in a chimney and destroys a home: the peril is the fire and the hazard is the dirty chimney.
What is hazard insurance?
Also known as “dwelling coverage,” hazard insurance describes the part of your homeowners insurance policy that protects your home's structure from various perils. Lenders use the term to underscore the minimum home insurance requirements before they'll approve your mortgage loan, as they have an interest in protecting your home's foundation and structure.
What does hazard insurance cover?
Hazard insurance protects you against damage to your home from covered perils and specifically covers your home's structure, including:
- Walls and flooring
- Built-in appliances, including water heaters
- Attached garage
Hazard insurance vs homeowners insurance
Hazard insurance, or dwelling coverage, is just one part of your overall home insurance policy. Keep in mind, hazard insurance only covers your home's structure and nothing more. It is not a substitute for homeowners insurance, which also provides coverage for liability, personal property, and additional living expenses.
Contact us today with your South Carolina homeowners insurance questions.