The term “hazard insurance” can be interpreted in various ways. We’ve selected this name – Colorado Hazard Insurance – because of how lenders utilize the phrase “hazard insurance” during the process of securing a home loan. Often people believe that when lenders say “hazard insurance” they mean home insurance. In reality, lenders are specifically requesting insurance for the structure on the property which they have a financial interest in protecting. Home insurance actually includes protections beyond just the structure on the property; such as your personal belongings, your personal liability, and additional living expenses incurred if the home were to burn down. The mortgage company does not have a financial interest in those insurance protections.
Lenders can “force place” insurance on a property if the homeowner has failed to maintain home insurance on the property. You could say this policy is a true “hazard insurance” policy because it is only concerned with protecting the structure. When it comes to Colorado Hazard Insurance as a company practice, we understand what is important to lenders, but we also work in the homeowner’s best interest. 99% of the time, it is in the client’s best interest to purchase a homeowner’s policy versus a standard hazard insurance policy.
