If you own a second home, whether you split time according to the seasons or simply maintain it for vacation purposes, you’d be right to protect it with the same coverage as regular homeowners insurance. However, a standard homeowners insurance policy will only extend liability coverage to this other location and not the structure itself. Either the new location must be added to the policy or a separate vacation home insurance policy is needed.
To set expectations, vacation home insurance is usually more expensive than insuring the same house as if a primary residence. Because of the additional risks posed to vacation homes, most insurance companies add a surcharge. This is simply because statistics prove vacation homes experience more claims.
Vacation Home Risks
Reasons why most insurance companies surcharge vacation homes.
Vacancy risk arises from an inherent decrease in oversight. Should an under-sink water line leak while the owner is at home, it will likely be caught and remedied before much damage occurs. However, if it happens in a vacation home while the owner is away for weeks or months, the damage will be greatly increased. In addition, homes that remain empty for extended periods are at greater risk to break-in. Even if only inexpensive items are stolen, repairing the damage caused by burglars is expensive.
When quoting a home, insurance companies consider the risks of the location. Is it on the east coast? Hurricanes are a consideration. Next to a calm stream in the Rocky Mountains? Flash floods. A summer home near Anchorage? Earthquake. The Midwest has tornadoes and the north has weight of fallen snow. If extreme weather or local topography put a home at risk, the price of vacation home insurance will increase proportionately, even if the owner has never made a claim.
Bundling vacation home insurance with your primary home is allowed by some insurance companies. This simplifies policies, provides convenience, and can even allow certain discounts to apply. However, bundling multiple homes on a single policy is not offered by all insurance companies and if the two homes are in different states, options are limited even further.
In many cases, the only solution is a second vacation home insurance policy. Carefully consider the coverages, just as you would your primary home. At times, a dwelling fire policy may be the best solution. Consult your insurance agent regarding the best options for your specific situation.
Personal Umbrella Policy
We recommend personal umbrella insurance to all our clients, doubly so if they own a vacation home. These policies are low-priced and can provide extended liability protection over both locations.
Renting Out a Vacation Home?
Renting a vacation home when not in use increases risk to you and the insurance company for guest injuries and structural damage. However, don’t let that stop you. Read Home-Sharing Insurance: How to Insure Airbnb, Vrbo, Ordinary Rentals, and More for valuable information on this topic. And since we are on the subject, the cost of your personal umbrella insurance will likely increase as well. Not all insurance companies will extend personal umbrella coverage over rented homes, but protection is certainly available.
For questions on vacation home insurance, contact your Bankers Insurance agent. We will help determine your risks and advise how to best cover them. Not a client of ours? Let us earn your business! Each of our clients is assigned a personal insurance agent and provided their email address as well as a phone number that rings right on their desk.