Second Home Insurance: What You Need to Know

Owning a vacation home can be a great investment. It’s a second home that you can go to over the summer or whenever you just want to get away from it all. But second homes can be an insurance risk due to no one being around to catch issues with the home and an empty home runs a higher risk of theft than one that is occupied regularly. But you are in luck, our friends over at the Insurance Information Institute have given us some tips to keep costs affordable.

Key Factors That Impact Vacation Home Insurance Costs:

While the homeowner's policy for your second home will provide the same types of coverage as your primary homeowner's policy, the following factors will likely impact your insurance costs:

• Location: Location is always a factor in homeowners insurance costs—for example, you need additional insurance if your dwelling is in a flood- or earthquake-prone area. With vacation homes, the very location that makes a place desirable may also make it more expensive to insure. For instance, a ski house or hunting lodge in a remote or mountainous area could be at greater risk for damage due to wildfire. A beach house may be more exposed to wind damage or storm surge from a hurricane. These location-based risks will impact the price of coverage, and in some cases, may even incur higher deductibles.
• Property: As with any house, the age and type of building materials used in a vacation home will impact the cost of insurance. What’s also important is whether your second home is a single-occupancy house, a condominium, or a townhouse. A condominium in a ski resort area, for instance, may have lower insurance costs than a stand-alone chalet. This is because a homeowners association maintains the property, and may provide some security. Importantly, the association insures the exterior of the property (the cost of it is generally included in the monthly maintenance fees). Your personal condo insurance will cover the specific areas of the unit listed in the policy, as well as your belongings.
• Amenities: Though wonderful for relaxation, pools and hot tubs add risk to your second home. If your vacation residence is equipped with these or other special amenities, you may pay a higher insurance premium and you should also consider additional liability protection, which will increase insurance costs, as well.

Save On Your Second Home Insurance Costs:

Having a second home and performing upkeep may be expensive as is, however, your insurance costs don’t have to be. These are some things for you to consider while looking for the right home and insurance policy:

• Choose a location with less risk: A home further from the beach won’t be as susceptible to storm surges, for instance.
• Bundle your policies: If you insure your second home with the same insurer that provides coverage for your primary residence, you may be able to save on premiums.
• Install an alarm system: A centrally monitored alarm system that detects both fire and break-ins can help lower the cost of insurance.
• Shop around: Get at least three quotes for the coverage on your second home; review the policy costs before you renew each year to see if you can get a better rate.

Renting Out Your Property:

If you plan to rent your vacation home to others, your homeowners’ insurance costs will likely increase and you may need to purchase additional coverage. If you rent your house out through programs like Airbnb, you will typically want to purchase insurance from them as well. Because renting your second home entails additional, more complex risks, it’s a good idea to consult with your insurance professional and learn more about coverage for renting out your home to others.