Hazard insurance protects a borrower's property from many factors such as fire, windstorm, snow, freezing temperatures, volcanic eruption, explosions, and smoke damage. It also protects against man-made perils such as vandalism, theft, riots, and damage caused by motor vehicles not owned by the borrower.

Note that hazard insurance does not protect against flooding or earthquakes; those are separate insurance policies. Other factors not covered by hazard insurance include war, power failures, nuclear hazards, zoning changes, government seizure of property (except if to prevent a fire from spreading), and damage caused by the borrower's neglect.

Hazard insurance is typically included in a borrower's homeowner's insurance policy, which also covers liabilities such as injuries to others while on the borrower's property and the medical bills that result from the treatment of the injuries.