10 May Disabled Veterans Guide to Homeowners Insurance
Ensuring that you and your family are covered at all times is important when it comes to living a secure life. And, to live a secure life, getting life insurance won’t suffice.
A homeowner’s insurance is a type of coverage that covers your residence and furnishings from any possible damages. It will also cover the medical expenses and legal fees in case someone is injured at your property.
As a civilian, you might have a million options for homeowner’s insurance. But, if you are a Veteran or a disabled current/former military member, you might be able to avail of special perks and advantages.
If you are someone who got injured in the line of duty, this one might be for you. Here it is. The ultimate guide to getting a homeowner’s insurance as a disabled Veteran and what perks you can qualify for.
Why Do You Need Homeowner’s Insurance?
Honestly speaking, it’s not about the possible benefits of getting a homeowner’s insurance but the fact that it is required by most lenders while applying for a mortgage.
Here are some of the reasons you need homeowner’s insurance.
It is mandatory in most cases.
As stated above, before you even get started with the process of applying for a mortgage, most lenders will ask you to get a homeowner’s insurance or will require proof that you already have it.
Moreover, if you live in areas that are prone to natural disasters like floods or earthquakes, you’ll need special types of coverage in addition to a traditional insurance plan like flood insurance.
According to the Consumer Financial Protection Bureau, if you don’t have homeowner’s insurance, your lender will be required to get it for you and charge it from you accordingly. However, because they might charge a little extra, it is recommended to get it on your own.
It protects more than just your house.
Contrary to popular belief, basic homeowner’s insurance would protect more than just your home. In fact, here’s what a basic policy would cover-
- It will cover the damage caused to any attached structures like your garage if it is damaged by a covered peril.
- The policy will offer coverage to the detached surfaces like a fence.
- It will also cover your furniture in case it is damaged/destroyed by a covered peril.
- If you are legally responsible for damaging or destroying someone else’s property, the insurance will cover the legal fees and repair cost for that.
- The policy will also cover medical bills, compensation for lost wages and legal fees if a guest is injured at your property.
- In case your house is damaged or destroyed by a covered peril like a fire, the policy will pay for hotel expenses till the time the house is repaired.
VA Loan Insurance Requirements
If you are a veteran or a current military member, you might be eligible for VA home loans.
What are VA home loans?
VA loans are mortgages guaranteed by the US Department of Veterans Affairs (VA) and are available exclusively to Veterans, military members, reservists and family members. These loans are available at some noteworthy perks like no downpayment requirements, no PMI (Private Mortgage Insurance) requirements, lower interest rates and flexible guidelines.
But, here’s the fact. When we state that it requires no PMI requirements, it means you do not have to pay for it. It is, however, mandatory in most cases. In the case of conventional mortgages, you would be required to pay for PMI if you make a downpayment of less than 20% of the total loan amount. However, in the case of VA loans, you do not need to make a downpayment of pay for the PMI.
Moreover, regarding the payment plan, all Veterans are required to pay for the coverage one year in advance. They can, however, ask the seller to pay it for them. After one year, you will be required to pay the premiums for homeowner’s insurance after one year. The premiums can increase or decrease at any time, so it is recommended to keep things in check.
Does the VA Offer Homeowner’s Insurance?
When you apply for the VA loan as an eligible applicant, you can work your way with the department to help you get homeowner’s insurance. While the VA offers a number of things like VA home loans, educational benefits in the form of GI bills and TRICARE health benefits, it does not explicitly provide homeowner’s insurance.
The VA can, however, help you get in touch with organizations that are willing to offer you discounts as a Veteran or a military member.
What VA Homeowner’s Insurance Covers?
The coverage plan of a homeowner’s insurance differs according to the type of coverage opted for. Regardless, here is what a basic homeowner’s insurance policy should cover-
Structure of the Home
In case your house is damaged or destroyed by a covered peril like theft, fire, lightning, hailstorm etc., the policy would cover the damages or even help to rebuild the house. In fact, some policies would also offer coverage to the detached surfaces of the home, like a detached garage or fence.
However, a standard policy will not offer coverage for any damages caused due to routine wear and tear, earthquake or flood. To gain coverage against earthquakes or floods, you would need to purchase a separate rider.
In case your valuable things like furniture are stolen or destroyed by a covered peril, the policy would provide coverage for this. In most cases, the coverage for personal belongings is 750-70% of the coverage on the home structure.
Some policies will offer coverage to the belongings that are stored off-premises. In this case, the coverage would be around 10% of the insurance amount.
Moreover, trees and plants will also be covered under a standard policy. However, the coverage is not extendable if the plant catches a disease.
A standard homeowner’s policy would also cover the damage caused by you to others. For instance, if your kids or your pet destroyed someone else’s property, this clause would provide coverage for repair costs and legal fees.
In addition to this, if someone like a guest is injured at your property, they can simply submit their medical bills to your insurance company to get coverage. Liability coverage starts with $100,000 but can be extendable depending upon your needs.
Additional Living Expenses
In case your house is destroyed by a covered peril, a standard homeowner’s policy will also cover the additional cost of living away from the home until the house is being rebuilt. However, this clause often comes with time limits, so it is recommended to ask your agent about the same.
In addition to this, ALE would also provide you with the rent if you used to rent out a part of your property before it was destroyed.
What Doesn’t Homeowners Insurance Cover?
Typically, a standard homeowner’s insurance will not cover any damages caused by floods or earthquakes. The policy will also not cover valuable jewelry, art collectibles or identity theft protection.
However, the coverage for these things can be purchased individually. You can talk to your insurance agent to find out the additional costs for covering your jewelry and artifacts.
If you live in a flood-prone area, you would be required to purchase an additional rider against any damages caused by floods. The cost of the extra coverage will depend upon your location, type of home and how prone you are to floods.
If you live in high-risk areas, most companies will ask you to get extra coverage for that. However, if no one is offering you the coverage, you can get it directly from the National Flood Insurance Program, administered by FEMA. All flood policies are guaranteed by FEMA, whether you buy them through a company or purchase it directly from the National Flood Insurance Program.
Regardless of where you bought it from, its rate and premiums will be set by FEMA. You can check their official website to find out if you live in a flood-prone area. All you need to do is enter your ZIP code or address.
When living in an earthquake-prone area, you would have to purchase the policy separately. However, unlike flood insurance, your policy will not be administered by the federal government.
3 Levels of Coverage for Veteran Homeowners
There are three types of coverage options you can opt for. Here’s an overview of all of them-
Coverage for actual cash value
The policy with an actual cash value coverage will pay out the amount equal to the home’s actual value. Meaning, in case your house is destroyed by a covered peril, this policy will only pay the current worth of the house. The current worth is calculated by subtracting the depreciation cost from the cost of the home.
This might not be a great option as the amount offered will not be enough to rebuild the home.
Coverage for replacement cost
A policy with replacement cost value will provide the amount that would be enough to replace the house if it is destroyed by a covered peril. No depreciation will be taken into account.
Guaranteed Replacement Cost
A coverage with guaranteed replacement cost offers the highest amount of coverage. If your house is destroyed by a covered peril, this policy will pay the exact amount required to rebuild the house, even if it crosses the coverage limit.
This can be pretty helpful if the material for rebuilding the house is not available abundantly after a calamity.
How are Homeowners Insurance Rates Determined?
Homeowner’s insurance rates depend upon a number of factors, including the amount of coverage you opted for, your location, type of home etc.
The rates will also depend upon how long you’ve been living in the house and the cost of construction.
How To Get a Better Rate As A Disabled Veteran?
To qualify for the best rates for disabled Veteran homeowner’s insurance, you must keep the following things in mind-
Maintain a Security System
Here’s a fact. The lower the chances of getting robbed, the lower your insurance premiums will be. To get started, you can install a security system in your home. Through this, you might qualify for lower rates.
Raise your Deductible
A deductible is an amount you would have to pay from your pocket until the insurance claim hits. If you raise your deductible, you will be able to qualify for lower premium rates.
Get a Policy with a Veteran Home Insurance Company that offers Veteran discounts
To qualify for the best insurance rates, you can contact an insurance company that provides exclusive discounts to military members.
Ask for other Discounts
You can ask the insurance companies for other discounts as well. It’s recommended to contact your agent to know what discounts you can qualify for.
When it comes to living in your dream house, it is vital to be covered at all times. It is always recommended to opt for coverage that would be sufficient enough to rebuild your home in case a calamity struck.