My mortgage lender is asking for hazard insurance, is this part of a homeowner's policy?

Confused couple seeks clarification on document prior to signing contract

Homeowners’ insurance is a package policy combine property insurance and liability insurance into one policy.  Most standard policies include four types of coverage: Structure, Personal Property, Liability and Loss of Use / Additional Living Expense. Additional coverage and limits can be added to your policy depending on your unique needs.

To get a mortgage loan for the purchase of your home, your lender is going to require a certain amount of hazard insurance. This is how lenders ensure their investment, your home, is fully protected against catastrophic damage, and that you would be financially capable of paying the mortgage down in the event your home is destroyed.


Since your mortgage lender is only assisting with the purchase of the structure of the home and not its contents or liability, this is the only part of your homeowners’ policy they are interested in. Lenders refer to this protection as hazard insurance as it covers damages to the structure caused by “hazards” such as fire, hail, lightening, vandalism, etc. Your insurance policy may refer to hazard insurance by other names, dwelling coverage, or coverage A, being the most common.  No matter what it is called, this coverage protects the structure of your home in the event of a covered loss.  If you own your home structure coverage will be included in your homeowner’s policy and will generally satisfy the requirements of your lender.

What about flood insurance?

Some lenders may also require that you purchase flood insurance. This is often based on the location of the home and the general risk of a flood occurring in the area. 

Flood insurance is not part of the homeowner's insurance policy and does need to be purchased separately.

Purchasing a home is a big deal, and can often be confusing, especially for first time buyers.  Concklin Insurance Agency is here to answer any insurance related questions you may have about your home, auto, or recreational vehicles.  Give us a call to talk to one of our trusted insurance professionals.