The world of insurance is wide and complicated. It comes with its own jargon that can be hard to understand unless you work in the industry. Some types of insurance overlap, and other types of insurance seem like they should overlap but really don’t.
For instance, it’s fair to wonder about the difference between condo insurance and hazard insurance. On the surface, hazard insurance may sound like a distinct plan that has nothing to do with any other type of insurance. The reality is more complicated, so let’s take a closer look at what condo insurance and hazard insurance do (and don’t) cover.
Hazard insurance and your home’s structure
The easiest way to remember what hazard insurance does is to think about the physical structure of your house or condo — hazard insurance covers that structure. This means it covers things like the roof, walls, foundation, windows, etc. It won’t reimburse you for damaged property inside your home. So if your structure is the only thing that’s damaged, then hazard insurance should cover your condo.
To look it at another way, imagine that you have a nice home in the suburbs of New Jersey. On a bright spring day, neighborhood kids are on your street throwing around a baseball. If you’ve ever watched a network sitcom, you know what happens next: a baseball goes flying through the window in your living room, shattering the glass and hitting an expensive antique lamp. If you have hazard insurance, then it should pay for the window repair. It will probably not pay for that antique lamp you lost, though. You could in theory try to sue the parents to recover your costs, and that would require New Jersey attorneys rather than insurance agents.
Obtaining hazard insurance with your condo insurance
Condominiums are more popular in some parts of the country than others. For instance, owner-occupied apartments are all the rage among New York’s elite class. It’s hard to own a house in the New York area, but owning a multi-million dollar condo in an apartment building shows status. They’re also popular in places with a lot of retirees, like Florida.
But buying condo insurance in New Jersey isn’t going to look quite like buying condo insurance in Florida. For that, you can thank a concept known as “anticipated hazards”. Both New Jersey and Florida have coastal areas, but Florida is considered much more vulnerable to hurricanes than the Garden State, because Florida is just a peninsula sticking out in between the Gulf of Mexico and the Atlantic Ocean. A storm making its way out from the coast of Africa has a decent chance of striking at least some part of the state. Storms like Hurricane Sandy in 2012 killed people and left lasting damage in New Jersey, but it was still considered a relative rarity.
Since tropical disturbances are more likely to hit Tampa or Miami than Atlantic City, you’re more likely to need separate hazard insurance that covers hurricanes in Florida to fully cover that condo you buy there. That’s in addition to your standard condo insurance policy. Insurance companies don’t want to go around handing out hurricane insurance like it’s candy in a state like Florida, so you’ll pay more for specific hazard coverage to ensure that you’re protected.
It’s also important to know that hazard coverage doesn’t rid you of any liability if someone gets hurt on your property. If a twister hits your property, hazard insurance can help you rebuild. But if someone injures themselves while playing a game of Twister in your living room, hazard insurance isn’t going to help defend you against a possible personal injury suit.