What Is VA Homeowners Insurance, and Do You Need It?

09 Nov What Is VA Homeowners Insurance, and Do You Need It?

Homeowners insurance is an essential component of applying for a VA loan, whether you are buying a new home or paying off your mortgage. It protects your house against theft and damage, among other things.

Most companies and lenders often require veterans to have insurance coverage of the total or fair price of the home to qualify for the mortgage.

In this article, we’ll discuss what VA homeowners insurance is, why you need it, where to get it, and tips for choosing the right policy for you.

Check out our article on determining your VA home loan eligibility!

What Is VA Homeowners Insurance?

VA homeowners insurance is often required for the VA loan types and other VA loan options. It’s referred to as hazard insurance. However, they are slightly different.

Hazard insurance is coverage for damage caused due to natural disasters. On the other hand, Homeowners insurance is a whole package that covers financial protection of your property against theft or damage.

Here’s what basic homeowners insurance covers.

• Dwelling coverage for property damage
• Coverage on other structures of the property
• Liability coverage that covers injuries caused due to someone else’s property
• Personal property coverage

Most VA homeowners insurance also covers the damage caused due to the following:

• Fire
• Falling objects
• Freezing
• Riots or vandalism
• Hail or wind
• Aircraft or other vehicles
• Weight of ice
• Explosion
• Lightening

Note – This list is not the actual description of what’s covered under homeowners insurance. Coverage can differ from policy to policy. This is just a basic representation of what a policy would look like. 

You must also note that most standard insurance does not cover the damages incurred due to natural disasters like earthquakes or floods. You would have to connect with your insurance provider to understand the policy altogether.

Before buying your next home, check out our article on the VA loan limits.

Why You Need Homeowners Insurance

Here are a few reasons to consider homeowner’s insurance.

It Is Mandatory in Most Cases

Generally, when you purchase a mortgage, the bank or lender will require you to present proof that you have homeowners insurance. Besides this, they might also need you to apply for other types of coverage like flood insurance if you live in a flood-prone area.

According to the Consumer Financial Protection Bureau, if you don’t have homeowners insurance, the mortgage provider would be required to apply it for you and charge you the actual insurance cost.

It Provides Coverage From Personal Belongings to Even Medical Bills

Good homeowners insurance protects more than just your house. It might even provide medical coverage to your guest if they incurred any damage while visiting.

Use our VA loan calculator to see how much your monthly payment will be!

VA Homeowners Insurance Coverage

Here’s an overview of what you can expect most VA homeowners insurance policies to cover.

Dwelling Coverage

Dwelling coverage covers any attached structures to your homes, like a garage or patio. The coverage amount is determined by calculating the square footage of your cost and what it would cost to rebuild it.

Other Structure Coverage

This option provides coverage to the unattached surfaces of your house, like fences or a shed.

Personal Property Coverage

Personal property coverage covers belongings like electronics and furniture in case of theft or damage.

Personal Liability Coverage

This coverage option offers financial and medical assistance if you are held responsible for damaging someone else’s property or injuring someone. It also covers legal fees.

Guest Medical Protection

If a guest/visitor is injured at your home, this coverage will provide medical assistance to them.

Additional Living Expense Coverage

If your house has been damaged due to an incident like a fire, additional living expense coverage will cover the cost of living somewhere else temporarily, like a hotel.

What Active-Duty Military Homeowners Need to Know

There are about a million insurance providers out there in the market. However, as a Veteran or an active military member, it is essential to choose a policy that is sensitive to your special needs.

Active military personnel have special needs and might require a different policy, especially if they are being deployed. So, here’s what military members need to know about homeowners insurance.

Where to Find It

Insurance policies are never about “one size fits all.” With the varying needs of service members, a suitable policy differs for everyone.

So, before you decide on your insurance provider, take a second to understand what you truly want. If you are already a member of USAA or Armed Forces Insurance, getting VA homeowners insurance from there would be a wise choice. You might accumulate additional discounts for shopping all policies from one place as well.

However, if getting the biggest discount is top on your mind, consider GEICO, Farmers, Liberty Mutual , or Kemper Insurance.

While you’ve probably had thousands of options on your mind, USAA and Armed Forces Insurance are the most top-rated organizations providing VA homeowners insurance.

USAA

Known for the best customer service and offering good coverage in low-cost policies, USAA is one of the top-rated insurance providers for military members and their families. USAA’s homeowner’s insurance provides coverage against fire, windstorms, theft, and earthquakes. It also offers additional coverage options like home-sharing coverage and military uniform coverage.

Armed Forces Insurance

Armed Forces Insurance offers coverage options like dwelling coverage, personal belongings insurance, medical payments, and liability insurance to active military members, Veterans, and family members. Armed Forces Insurance made it to our list because it offers customizable plans, allowing every service member to get a plan best suited for their needs.

However, if getting the cheapest homeowners insurance is on your mind, USAA and Armed Forces Insurance might not be the best choice as they don’t offer military discounts.

You can get cheaper insurance policies from companies like GEICO or Farmers.

Rates for VA Homeowners Insurance

On average, homeowners insurance in the United States would cost $1,477 per year for a policy that offers $25,000 as dwelling coverage. However, the cost differs from area to area. A military member might get cheaper policies depending upon their military status.

VA Loan Homeowners Insurance Requirements

Requirements differ for different policies. However, you must be a current/former military member with an honorable discharge to qualify for military discounts.

Spouses or children of Veterans can also claim these discounts. You might also qualify for additional offers if you are a purple heart recipient or a medal of honor recipient.

Learn more about obtaining your Certificate of Eligibility (COE).

Are You Considering a VA Loan?

VA home loans are no down mortgage opportunities that come with lower interest rates and flexible guidelines. You don’t need to pay for a downpayment or PMI to qualify for this loan.

While the VA does not particularly sell VA homeowners insurance, the department might refer you to some insurance providers who are willing to offer competitive rates.

What the VA Requires for Homeowners Insurance Policies for Your VA Home Loan

You must get homeowners insurance before the VA loan closing. Make sure you know the policy well before you apply for it. You can also compare different policies to decide on the best rates and most discounts.

What Should You Look For in Homeowners Insurance?

Because your military insurance will be sensitive to particular needs, the policy might contain clauses related to deployment. There are two clauses to look for in a policy:

• War Zone Exemption – A typical policy would cover your house anywhere in the world, except in a war zone. However, a military-friendly policy will include even war zones under coverage.
• Occupancy Clause – According to typical policies, if at least one person is not residing in the insured home for more than a month, the policy will become invalid. However, in the case of VA homeowners insurance, this clause will most likely not be included.

Ways to Save on Homeowners Insurance

VA homeowners insurance isn’t a luxury; it is a necessity. And, while the insurance is primarily mandatory in most cases, here are some ways you can save on the insurance and save some extra bucks-

• Shop around as much as you can. Get quotes from different companies to close on a deal that offers the most benefits.
• Increase your deductible to $500 to decrease your monthly premiums by 12%.
• Purchase homeowners insurance from the same company you purchase auto insurance or life insurance from. This could help you get additional discounts.
• Never include the value of land to decide how much insurance you need. Always ensure the home, not the land.
• If no one smokes in your house, some companies might reduce your premiums. 
• Get a security system to avoid theft. You might also get a 10%-20% additional discount if you have one already installed.

The Bottom Line

Buying VA homeowners insurance is a necessary step in getting approved to buy your new home or refinancing your existing mortgage. The policy protects both you and the mortgage company from potential risks due to theft, damage, and other events. Make sure you check out the companies we discussed above that offer options for veterans and active duty service members.