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Hazard insurance is a policy placed on your home to protect the homeowner in the event of a catastrophic event, such as a fire or a storm.
Significance
Hazard insurance pays for major expenses when a residence is damaged by outside, uncontrollable sources.
Function
Most hazard insurance payments are made through an escrow payment attached to the homeowner's monthly mortgage payment.
Time Frame
Most hazard insurance policies have a bi-annual or annual payments. The mortgage holder pays the hazard insurance bill from the accumulated escrow payments.
Features
Several different payments are made from typical escrow accounts, such as hazard insurance, real estate taxes and homeowner's association dues.
Considerations
If a borrower's hazard insurance premium rises and it is collected in his monthly mortgage payment, his overall payment will increase as the premium increases.
Source:
WordNet.Princeton.edu: Hazard Insurance
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