Owning multiple properties means increased responsibility to protect and maintain them. A general real estate liability isn't enough to serve the purpose. What you need is a comprehensive support to provide additional protection to the property at the time of a mishap. It is a financial protection that helps the real estate owner in paying for the repair of the damage his property has undergone due to an accident. Real estate hazard insurance serves the purpose right.
Hazard insurance protects the property owner against any damage caused by natural disasters such as tornado, tsunami, earthquake, fire and storm. The difference between general real estate insurance and hazard insurance program is that the latter covers only physical damages. Insurer calculates the premium amount for hazard insurance on the basis of the hazards the region, where the properties are, is prone to. Other factors that they consider include building methods used, appraisal value of the property and the age of the property.
When a borrower applies for mortgage loan, one of the prime requisites of the lender is that the borrower purchases a hazard insurance program.
What's Considered a Hazard?
Hazard is a condition or an event that increases the chances of someone getting harmed or injured. In case of real estate, a hazard might cause severe damage to the property. This type of insurance mostly covers the damage caused to a property due to fire, windstorm, earthquake and rain. One thing that is worth noticing is that you can take the real estate hazard insurance for both - rental and vacant units.
Choosing Insurance Company for real estate hazard insurance policy isn't difficult, provided you know what you are actually looking for. While every insurance company has different inclusions and exclusions for the real estate hazard insurance, a person needs to determine what his requirements are and which company is closest to meet them all.
Here are a few highlights of the hazard insurance program:
- Monthly or annual premium payment plans
- Replacement cost coverage
- No photos or inspections required prior to or after filing the claim
- ‘Tier’ rating on the basis of state and zip code
Do you Need an Extra Protection?
If you are into real estate business, you might need more than hazard insurance. For example, in certain areas such as a few regions in California are prone to earthquakes and wildfires. There are chances that the hazard insurance policy might not cover it and you will have to take a "rider" on the coverage.
No two businesses have the same requirement, even if they are from the same industry such as real estate. But, both need financial protection to deal with the bad times in a firm way. Real estate hazard insurance is a necessary financial protection that every business should take.