Hazard insurance is an insurance policy to protect homeowners against loss due to property damage. Lenders require that you get a hazard insurance policy before you buy or refinance a home. Hazard insurance provides compensation for losses due to property damage caused by a fire, a severe storm, or other types of perils. Generally, you have to pay for the first year of hazard insurance on the closing date. Hazard insurance is also available as part of a more comprehensive homeowner policy.