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Homeowners should know about mortgage hazard insurance

On Behalf of | Jun 6, 2023 | Bad Faith Insurance

With the number of natural disasters that have impacted Texas in recent years, residents are certainly aware of the need for sufficient insurance coverage. Most will understand that they should have flood insurance. However, there are other types of insurance to be aware of, including mortgage hazard insurance.

What does mortgage hazard insurance cover?

Many homeowners face obstacles when they try to collect on an insurance claim because they are unsure of their coverage. Mortgage hazard insurance gives coverage as part of a homeowner’s policy. It is designed to pay for damage caused by vandalism, fire and other causes.

For example, wildfires have been a major problem across the nation. If one happens in Texas and people have damage to their home because of it, this insurance covers for the repairs.

It also covers people who have suffered loss because of a fallen tree, a vehicle crashing into their property, lightning and hail. It is imperative to remember that this does not cover all disasters. People should have separate insurance for flooding. If damage happens because the property was not adequately maintained, that will not be covered.

Failing to understand insurance coverage leaves homeowners vulnerable

The connection between insurance coverage and the mortgage is based on a lender requiring a prospective homeowner to have a minimum amount of coverage before the loan is approved. Proof of homeowners insurance is necessary when a person signs their mortgage and the insurance policy must be maintained.

Despite that, people might not get the right insurance or they could have a dispute with the insurance company as to whether their coverage applies to the incident that damaged their property. Knowing about the types of insurance needed, including mortgage hazard insurance, is critical.