How To Insure A Second Home

Are you buying a vacation home? Congratulations! What about insuring it? Whether you plan to use the property as a vacation/second home for yourself or as a rental property to generate income, you’ll need insurance unless you plan to pay for losses out of your pocket. Here are some things to know about insuring a second property.

Vacation Home

Vacation homes are a great way to escape, but just like your primary home, it needs insurance. While the policy for your second home will provide the same types of coverage as your primary homeowner’s policy, the risks for a vacation home are more significant since you’re away from it for much of the time. There’s a higher risk of theft, vandalism, or damage such as burst pipes, which contribute to higher insurance costs than your primary home. When looking at getting a second home, consider these factors that may affect what you’ll pay to insure it:

Location – Location always factors into the cost of homeowner’s insurance. The location of a vacation home might be part of what makes it attractive, but it might also make it more expensive to insure. A ski house or hunting lodge in a remote or mountainous area presents a greater risk for damage from wildfire, while a beach house may be more exposed to wind damage or storm surge from a hurricane. These risks will affect the price of coverage, and may also result in higher deductibles.

Property Type – The age and type of building materials used in your vacation home will affect the cost of insurance. Also important is whether your second home is a single-occupancy house, a condominium, or a townhouse. A condominium may have lower insurance costs than a stand-alone home because a homeowners association maintains the property, may provide some security, and insures the exterior of the property. A personal condominium policy will cover specific areas of the unit listed in the policy, plus your belongings.

Amenities – Vacation homes that have extras such as pools and hot tubs add risk to your second home and may raise the cost to insure. You should also consider increased liability coverage.

There are ways to bring down the costs of insuring a second home, such as:

• Picking a location with less risk
• Bundling your policies 
• Installing an alarm system 

Rental Property

Are you planning to rent out your second home? A standard homeowner’s policy might not cover losses that occur while it’s being used as a rental, and you may need specialized coverage. If you’re thinking of making some extra money by renting out your vacation home when you’re not using it, contact an insurance agent and make sure you’re appropriately covered. Here are some things to consider if you’re planning to rent out your vacation home:

Leasing your vacation/second home long-term (6 months, one year, etc.) –  A landlord or rental dwelling policy is usually necessary. Landlord policies typically cost about 25 percent more than a standard homeowner’s policy and come with increased protections. Landlord policies provide property insurance coverage for physical damage to the structure due to covered losses named in the policy. Any personal property you leave on-site for maintenance or tenant use is also covered. The policy also includes liability coverage that takes care of legal fees and medical expenses if a tenant or one of their guests gets hurt on the property. If you aren’t able to rent out the property while it’s being repaired or rebuilt due to damage from a covered loss, loss of rental income may be paid for some time.

Renters Insurance – Your coverage is limited to the structure and your financial interest in it. To avoid disputes regarding damage of your renter’s belongings, you may want to consider requiring a tenant to buy renters insurance before signing a lease, since their possessions aren’t covered under your policy.

A vacation home is fun and exciting. Let us help you get the right insurance for your investment.