2.1 Virginia Homeowners Insurance Requirements

Where Homeowners Rules Live in the Code

Virginia regulates owner-occupied dwelling and homeowners insurance under Title 38.2 (Insurance), Chapter 21. The headline statute for the Series 11-03 state section is Code of Virginia 38.2-2114 ("Grounds and procedure for termination of policy"). The Bureau of Insurance (BOI), a division of the State Corporation Commission (SCC), enforces these rules. Expect 4-6 state-section questions on the exact day counts below.

Cancellation of a Dwelling Policy (38.2-2114)

A key concept is the 60/90-day rule. While a policy is brand-new the insurer has broad underwriting freedom; once it matures the grounds for cancellation shrink to a statutory list.

Statutory grounds after 90 days include: non-payment; conviction of a crime increasing the hazard; fraud or material misrepresentation; willful or grossly negligent acts increasing the hazard; physical changes making the property uninsurable; and the SCC determining continuation would place the insurer in violation of the law.

Trap: Candidates confuse the 60-day liability-policy threshold (38.2-231) with the 90-day property/dwelling threshold (38.2-2114). On the property exam, the owner-occupied dwelling number is 90 days, and non-pay notice is 15 days, not 10.

Non-Renewal

To non-renew an owner-occupied dwelling policy the insurer must mail or deliver written notice at least 45 days before the expiration date and state the specific reason. If the insurer fails to give proper notice, the policy is continued until the required notice is given. Notice may be delivered electronically to an address the insured supplied.

The VPIA (Virginia's FAIR Plan)

The Virginia Property Insurance Association (VPIA) is the state FAIR Plan — an insurer of last resort for property that the voluntary market declines (high crime, coastal wind, poor condition). It is funded by an assessment on all licensed property insurers.

VPIA writes named-peril, often ACV coverage with sublimits — narrower than an HO-3. It is a last resort, not a price shopper's option.

Homeowners Forms Tested on the State Exam

Virginia adopts the standard ISO homeowners forms, and the state section assumes you know the differences:

A recurring trap: on an HO-3, theft of personal property is still settled on a named-peril basis, while the dwelling enjoys open-peril coverage. Only the HO-5 extends open-peril coverage to contents.

Required Disclosures

Virginia requires producers and insurers to give residential applicants clear written disclosures so consumers understand what they bought:

• Replacement Cost vs. Actual Cash Value — the policy must show whether dwelling and contents are settled on RCV or ACV; this drives whether depreciation is withheld.
• Coverage summary under 38.2-2126 — limits, deductibles, and major exclusions in a readable format.
• Flood exclusion notice — standard homeowners forms exclude flood; if the property is in a Special Flood Hazard Area the agent must point the buyer to flood coverage.
• Hurricane/wind deductible disclosure — the percentage deductible and its trigger must be conspicuously disclosed.

Wind, Hurricane, and Flood Exposure

Virginia's Tidewater and Eastern Shore counties carry real hurricane exposure, so coastal policies frequently apply a percentage hurricane deductible rather than a flat dollar amount.

Worked example: A named hurricane causes $50,000 of wind damage to a $300,000 home with a 5% hurricane deductible. The insured absorbs $15,000; the insurer pays $35,000. Had a 2% deductible applied, the insured would absorb $6,000 and the insurer pay $44,000. The deductible only triggers when the storm meets the policy's named-storm/hurricane definition; ordinary thunderstorm wind uses the flat all-other-perils deductible.

Flood is never covered by a homeowners form. It is written through the National Flood Insurance Program (NFIP) or the private flood market. The standard NFIP dwelling form has a 30-day waiting period before coverage takes effect (with limited exceptions).

Mortgagee and Escrow Rules

Most lenders require coverage as a loan condition. The lender is named as mortgagee (the standard mortgage clause protects the lender even if the insured's own act would void coverage), requires flood coverage in an SFHA, and may force-place lender-placed insurance if the borrower's policy lapses — typically more expensive and protecting only the lender's interest, not the borrower's contents or liability.

Exam tip: A statutory free look is not the headline consumer protection for VA homeowners exam questions — the heavily tested numbers are the 38.2-2114 15/45/90-day figures and the VPIA's role as the FAIR Plan.