closing
hazard insurance
Hazard insurance is property insurance protecting against physical damage from perils such as fire, wind, hail, and theft, typically included in a homeowner's policy. Mortgage lenders require it as a loan condition, often naming themselves as loss payee, and frequently collect premiums through an escrow account. Standard policies usually exclude flood and earthquake damage, which require separate coverage.
- Exam tip
- Hazard insurance is the "I" in PITI. Remember that flood damage is excluded and requires separate flood insurance where required.
- Example
- Before closing, the buyer must show a homeowner's policy with $350,000 in dwelling coverage, and the first year's premium is paid at closing.
Related terms & state variants
Sources
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Last verified: 2026-10-23