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Janet Berry-Johnson, CPA, is a freelance writer with a background in accounting and income tax planning and preparation. She's been writing for Compare.com since 2023 and has also appeared on various business and finance sites, including LendingTree, Chime, Insurify, Forbes, and WSJ. She’s passionate about making complicated financial topics accessible to readers.
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Lequita Westbrooks is an insurance editor at Compare.com. Her writing and editing experiences span several industries, including insurance, personal finance, higher education, and more. She excels at explaining complex topics like auto insurance in simple, easy-to-understand language and is passionate about helping readers save money. Lequita graduated from the University of South Florida, where she earned her Bachelor’s degree in English.
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Hazard insurance is the part of your homeowners insurance policy that protects your home against perils such as fire, storms, or vandalism. If you have a mortgage, your lender likely requires hazard insurance to protect their investment.[1]
Whether you’re a first-time buyer or reviewing your current coverage, this guide will help you understand what hazard insurance covers and doesn’t, how much it typically costs, and how to buy it.
Hazard insurance either lists the specific risks it covers or covers everything except what the policy specifically excludes.
Standard policies don ’t cover floods or earthquakes, so you’ll need a separate policy for those risks.
Factors like your home’s location, age, construction, and claims history influence the cost of hazard insurance.
Hazard insurance protects the structure of your home against specific events such as fires, lightning, and windstorms. It’s usually not a stand-alone policy but part of a standard homeowners insurance policy.
While you might see the term “hazard insurance” listed separately on mortgage documents, it’s usually part of a broader homeowners insurance policy.
A standard homeowners policy also includes coverage for liability, your personal property, and additional living expenses if you need to live elsewhere temporarily after a covered claim.[2] Your mortgage lender is primarily concerned with the hazard portion because it protects the physical structure, which is its collateral for your loan.
Without hazard insurance, your lender risks losing the value of the property in a disaster. That’s why lenders require proof of insurance before you close on a home loan, and they continue to verify coverage as long as you have a mortgage.
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Hazard insurance pays to repair or rebuild your home when a covered peril damages it. Most standard home insurance policies list the perils they cover or cover everything except specific exclusions.[3]
Common covered perils include:
Fire or smoke: Accidental fires or wildfires that damage your home
Lightning: Electrical surges or fire caused by lightning strikes
Windstorms and hail: Damage to roofs, siding, and windows
Vandalism: Intentional property damage caused by other people
Theft: Damage to your home’s structure during a break-in
For example, if a tree falls on your roof during a windstorm or a fire breaks out in your kitchen, your hazard insurance helps pay for the repairs.
When reviewing hazard insurance, you’ll come across two types of coverage: named perils and open perils. The difference is how each defines risk.
A named-perils policy only covers events specifically listed in the policy. An open-perils policy, sometimes called “all risk,” covers everything except specific exclusions listed in the policy.[4]
Open-peril policies offer broader protection but tend to be more expensive. Here’s how they compare:
Named-Perils Policies Cover Only …
Perils explicitly listed in your policy
Common risks like fire, lightning, theft, and vandalism
Open-Perils Policies Cover Everything Except …
Perils explicitly excluded in your policy
Unusual events like wear and tear, floods, or earthquakes
Hazard insurance doesn’t cover everything that can damage your home. Most policies exclude flood, earthquake, general wear and tear, and damage from neglect or poor maintenance.
If you live in an area prone to floods or earthquakes, you’ll likely need to buy separate policies for those risks. For example, you can get flood insurance through the National Flood Insurance Program (NFIP). Some insurance companies offer earthquake coverage as an endorsement to fill in gaps.
It’s important to review your policy carefully and talk with your insurance agent to ensure you have the right coverage for the threats specific to your area.
Hazard insurance is part of a standard home insurance policy. You generally can’t buy stand-alone coverage, but its cost makes up a large portion of your homeowners insurance premium.
For a home with $300,000 in dwelling coverage, the national average cost of homeowners insurance is $211 per month, according to Compare.com data. But your rate may be higher or lower depending on your location, property value, and risk factors.
Still, it’s possible to save money by bundling your home and auto insurance with the same insurer.
The table below highlights some of the cheapest home insurance companies, based on our research.
Company  | Average Annual Premium |
|---|---|
| Vermont Mutual | $864 |
| Grange | $1,260 |
| Narragansett Bay Insurance | $1,332 |
| Amica | $1,392 |
| Unitrin | $1,440 |
| CSAA | $1,464 |
| Westfield | $1,524 |
| Cincinnati Insurance | $1,620 |
| AIG | $1,704 |
| Hastings Mutual Insurance Co | $1,728 |
| USAA | $1,752 |
| AFI | $1,788 |
| National General | $1,860 |
| American Family | $1,860 |
| Travelers | $2,004 |
| Farmers | $2,160 |
| Mercury | $2,220 |
| Allstate | $2,256 |
| ASI | $2,340 |
| Auto-Owners | $2,388 |
| Foremost | $2,388 |
| Nationwide | $2,676 |
| State Farm | $2,712 |
| Grange Mutual | $2,784 |
| Encompass | $2,952 |
| Erie | $3,012 |
| COUNTRY Financial | $3,084 |
| Hanover | $3,144 |
| Allied | $3,252 |
| Pure Companies Grp | $3,360 |
| Chubb | $3,636 |
| Shelter | $3,648 |
| Farm Bureau Mutual (Ia Group) | $3,708 |
| Metropolitan | $4,248 |
| Universal Ins Co Of N. America | $4,608 |
Home insurance companies calculate your premiums by assessing your likelihood of filing a claim. Insurers look at location-specific risks, home characteristics, and your insurance history. Each of these factors helps determine how much hazard coverage will cost within your homeowners policy.
Common factors that affect your home insurance premium include:
Location: Homes in areas prone to wildfires, hurricanes, or high crime often cost more to insure.
Home age and construction: Older homes or those with outdated electrical or plumbing systems can pose higher risks and have higher premiums.[5]
Construction materials: Brick homes often cost less to insure than wood-frame homes due to better fire and wind resistance.
Claims history: A history of frequent claims can raise your insurance rates.[6]
Credit history: In many states, insurance companies use credit-based insurance scores to help set premiums.
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If you have a mortgage, your lender requires you to have homeowners insurance with hazard coverage. It’s a condition of every mortgage loan. If you live in a condominium, your condo association bylaws will also likely require it.[7]
Even if you pay off your mortgage, hazard insurance is still a smart investment. Without it, you’re on the hook for the full cost of rebuilding after a fire, storm, or other disaster. Rebuilding can cost hundreds of thousands of dollars, so maintaining coverage protects your property and your long-term financial security.
Whether you’re buying a home or reviewing your current policy, getting the right coverage to protect your property is essential. Since hazard insurance is part of a standard homeowners insurance policy, the process is straightforward.
Here’s how to update or buy your coverage:
Assess your coverage needs. Estimate your home’s replacement cost, which is different from its market value.
Gather quotes. Contact multiple insurance companies or use comparison tools to shop around and compare rates and coverage options.
Review coverage. Confirm whether the policy offers named- or open-perils coverage, so you know what is and isn’t covered.
Review annually. Reassess your coverage each year. You may need higher limits to account for inflation, renovations, or new risks.
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Hazard insurance can be confusing. The answers below can help clarify what it covers and what it doesn’t.
No. You don’t need three separate policies. Hazard insurance is part of homeowners insurance. Mortgage insurance is something else entirely and protects the lender if you stop making your mortgage payments.
Costs vary, but hazard insurance is typically the largest part of a homeowners policy. The nationwide average is $2,601 per year for a policy with $300,000 in dwelling coverage, according to Compare.com data. Your personal rate will depend on factors like your location, home, and risk profile.
No, not while you have a loan. Lenders require proof of hazard insurance to protect their investment. If you let your policy lapse, your lender may purchase what’s called “force-placed insurance” on your behalf and add the premiums to your mortgage payment — often at a higher cost.[8]
Hazard insurance costs rise primarily due to high-risk factors like severe storms, wildfires, and other natural disasters. Additionally, inflation and rising construction, replacement, and repair costs contribute to more expensive premiums in many areas.[9] The higher the risk and potential repair costs, the more you’ll pay to protect your home.
Generally, no. You can’t deduct hazard insurance premiums on your taxes unless you use the home for rental or business purposes. It’s a good idea to talk to a tax professional to understand your specific situation and options.
Compare.com data scientists analyzed rates from more than 180 home insurance companies sourced directly from Compare.com’s partner companies and Quadrant Information Services. Rates span all 50 states and Washington, D.C., and quote averages represent the mean price for a given coverage level and geographic area. To ensure data reliability, only insurers meeting minimum quote thresholds were included in the analysis.
Unless otherwise specified, quoted rates reflect the average cost for homeowners with no prior claims and good credit with a home construction year of 1980. The default coverage assumptions include:
Additional data points beyond these default values are sourced from Compare.com’s proprietary database. Rates are updated monthly.
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Janet Berry-Johnson, CPA, is a freelance writer with a background in accounting and income tax planning and preparation. She's been writing for Compare.com since 2023 and has also appeared on various business and finance sites, including LendingTree, Chime, Insurify, Forbes, and WSJ. She’s passionate about making complicated financial topics accessible to readers.
Lequita Westbrooks is an insurance editor at Compare.com. Her writing and editing experiences span several industries, including insurance, personal finance, higher education, and more. She excels at explaining complex topics like auto insurance in simple, easy-to-understand language and is passionate about helping readers save money. Lequita graduated from the University of South Florida, where she earned her Bachelor’s degree in English.
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