Homeowners who are current members of the military or veterans may want to purchase home insurance, either because it's a VA mortgage loan requirement, or simply to protect themselves financially. Fortunately, homeowners insurance companies offer a variety of policy benefits and discounts particularly suited to military families. Those who are on active duty should just take note that homeowners insurance policies may exclude certain portions of your coverage while you're deployed. However, by choosing the right insurer or adding an endorsement to your policy, you can ensure your coverage stays in place while you're deployed.
Home Insurance Requirements for VA Loans
One of the most lucrative benefits for people who are serving or who have served in the armed forces are VA home loans, which require no down payment and typically have a lower interest rate than loans available to the public. However, like most mortgages, VA home loans require you to buy homeowners insurance. This protects the lender's investment—as well as your own—while you are in the process of paying off your mortgage.
Specifically, homeowners who take out VA loans are required to purchase a policy with hazard insurance coverage that will pay for the cost to rebuild your home, should it be damaged or destroyed. Lenders will often set a maximum deductible of either $1,000 or 1% of the total coverage amount, whichever is higher. The home insurance policy should cover, at minimum, the perils named in an HO-1 insurance policy, but you should consider adding greater coverage depending on the risks of the region you live in. And if you live in a FEMA-designated special flood hazard area (SFHA), you'll also need to purchase flood insurance to qualify for a VA loan.
Lenders for VA loans usually require you to put your insurance payment in escrow as a safeguard to ensure that insurance payments are made promptly. How this works will vary depending on your lender, but you'll typically have to pay a certain amount—often 15 months' worth of premiums—upfront as a buffer, then continue to make monthly payments to maintain the balance.
However, VA loan recipients are not required to buy private mortgage insurance. Most of the time, when you open a mortgage with a down payment of less than 20%, your lender will require you to protect the mortgage with private mortgage insurance. But the federal government guarantees VA loans, meaning you are exempt from this requirement.
Which Home Insurance Companies Offer the Best Rates for Veterans?
Many homeowners insurance companies provide discounts or special rates just for people who have served in the military. Several military-specific insurance companies also offer low-cost policies specifically designed to fit the needs of active-duty and retired members of the military.
If you're on active duty, we recommend comparing policies from the military-specific insurers first because they might better fit your needs. If you just need a basic policy, we recommend comparing quotes from military-specific insurers as well as those with veteran discounts, as each insurer has a different method of determining your rates.
Military-Specific Home Insurance Companies
There are a number of military-specific insurance companies that tailor their policies and rates to fit the needs of needs of members of the armed forces and their families. As these companies only provide services to people who have served in the military and their families, they do not provide an extra military discount. However, annual premiums from insurers who specialize in military families tend to be very competitive with other insurance companies' rates. As such, they are often the best homeowners insurance carriers for veterans or active service members.
USAA is an especially popular choice among people in the armed forces, as they offer a range of financial services, including banking and credit cards, in addition to home and auto insurance. They offer many benefits that are well-suited for people in the military. For example, USAA offers replacement cost coverage for all its homeowners insurance policies. Additionally, homeowners insurance policies from USAA cover anything you bring with you while on active duty, including your uniform. And any home insurance claim you make while on active duty won't be subject to a deductible, meaning you'll be reimbursed for the full cost of the lost or damaged property.
Veteran and Military Family Home Insurance Discounts
Some insurers, like Progressive and Farmers, also offer military discounts to current and former members of the military, although availability varies by state. GEICO doesn't sell homeowners insurance directly, but many of the companies it partners with to offer homeowners insurance offer discounts to members of the military. It only takes a few minutes to get a quote from each of these insurers, and the right quote can save you hundreds per year, so it's worth doing the legwork to find the best rate for which you're eligible.
Other Discounts and Ways for Military Families to Save on Home Insurance
While not exclusive to veterans and their families, many insurers offer discounts to their customers that can stack up to boost, or even surpass, a military discount. For example, many insurers give you a discount if you bundle multiple insurance types, most commonly home and auto insurance, from the same provider.
You can also reduce your homeowners insurance rates by making certain upgrades to your home. The exact list will vary by your insurance company, but eligible upgrades include impact-resistant roofs, burglar alarms and a sprinkler system.
Finally, you can reduce your monthly payment by increasing the deductible on your policy. However, this will result in increased costs should you ever need to make a claim, so weigh the pros and cons of doing so carefully.
Who Is Eligible for Military-Specific Home Insurance Policies and Discounts?
There is no single definition of a veteran for insurance purposes, and there's no set legal rule for who is eligible for a military benefit or discount from a particular insurance company; every provider decides its own rules. However, the qualifications for discounts and benefits are fairly wide-ranging and usually include your family members as well.
Criteria that can affect your eligibility for benefits include:
- Length of service
- Whether you are on active duty
- Whether you are currently deployed
- Whether you are a member of the National Guard or Reserves
- Type of discharge you received
- (For family members) How closely you are related to someone who served
As an example, USAA, one of the most common providers of insurance to military service members and their families, offers policies to:
- Active personnel
- National Guard and Reserve members
- Anyone honorably discharged or retired
- Members of U.S. Military Academies (such as West Point) or ROTC
- Family members of current or former USAA members, including spouses and children
The criteria insurance companies use to determine eligibility change periodically, so call your insurer to confirm you can receive military rates on your home insurance. And keep in mind that these benefits are determined separately from legal benefits for veterans, such as subsidized education programs and VA medical care.
How Being Deployed Can Affect Your Homeowners Insurance
There are two clauses that commonly appear in homeowners insurance contracts that impact people in the military, especially if there is a chance they will be deployed: an occupancy clause and a war zone exemption. Check for these clauses in your insurance contract before signing, and understand how each will impact your coverage should you be deployed overseas.
Most homeowners insurance policies usually have rules regarding occupancy. Someone must live in your home in order for it to be covered under a typical policy. If you are deployed and your home is vacant while you are away for a certain amount of time—usually 30 to 60 days—your policy may be void.
Ideally, you should check for this clause while choosing an insurance policy. Pick one without a vacancy clause or one that makes an exemption for active military duty, if you can. Military-specific insurance companies are most likely to offer this. Otherwise, you'll have to purchase an extra endorsement that protects your home while it is vacant.
War Zone Exemption
The second clause to look out for is a war zone exemption. While most homeowners insurance policies cover your belongings no matter where you are in the world, many insurers make exemptions for war zones. In other words, with this exemption in place, if something you own is damaged while in one of these designated areas, your homeowners insurance policy won't help you replace it.
Avoiding a war zone exemption is another reason to purchase your policy through a military-specific insurance company like USAA. Not only does USAA not have a war zone exemption, but if you're on active or reserve duty, USAA will waive the deductible for your claim.