When you secure a USDA loan, you’ll need to have homeowner’s insurance. Sometimes referred to as hazard insurance, homeowner’s insurance serves as a safety net against many unexpected problems in a home, like damage from fire, wind or other weather-related issues. This insurance policy will also protect your USDA lender’s interests by safeguarding collateral.
It’s important to note that your homeowner's insurance policy will not cover some damages, including damage from floods or earthquakes. If you live in an area prone to these events, you’ll want to look for a separate insurance policy specific to your area of concern.