Getting homeowners insurance is an important aspect of home ownership that has many details involved. If you are getting insurance on a second home, things can get complicated. We will guide you through the process of getting adequate home insurance coverage for your second home.
What are the most commonly asked questions in regards to insuring a second/vacation home?
Can you use one insurance policy to cover both homes?
What's the best type of policy for your second home?
Are there any cost differences when insuring your second home?
What factors decide your home insurance rate?
When deciding to get insurance for your second home, you can either:
Use one insurance policy for the house you currently live in and use it to extend liability to your second home. It means if someone gets injured at your second home, and you are found liable, your primary home's insurance policy may help pay for their resulting medical bills or legal expenses you incur. Ask your current homeowner's insurance provider whether they have any provisions for using your current insurance policy on a second home. They may ask you to purchase a "dwelling policy," which covers property damage and theft only, not a liability.
Get a separate policy for your second home so that you have full coverage for each house you own.
If you choose to get an homeowners insurance policy for your second or vacation home, there are a couple of types to choose from, and each choice has its features and benefits. However, the main advantage you are looking for is the peace of mind that everything and everyone at your second home is covered.
When insuring your second home, you'll likely need to get an insurance plan to cover the home's structure as well as the internal contents. Your primary home's policy might extend its liability coverage to your second home, but it won't cover the installation of your second home or the contents therein.
The reason for this: your second or vacation home is more prone to damages than your primary residence as it may often be left unattended. Therefore, your house is more at risk of burglary, bursting pipes, fire, smoke, etc.
If your second home is a vacation home that you only use occasionally, you may want to consider getting vacation home insurance. This policy is a type of homeowners insurance that covers a home that you own but don't live in full time.
Once you get a standard homeowners insurance for your second home, make sure it covers all the essentials. These include:
Personal Property Coverage: This helps protect your belongings, such as furniture, clothing, and appliances. It is standard on a homeowners insurance policy, but you can customize it to make sure all of your belongings are protected.
Personal Umbrella Policy: With a second home, your homeowner's insurance policy limits may not be enough to protect you from a costly covered loss. This coverage can help if the damage to your second home is greater than the limits of your primary home coverage.
Personal Liability Coverage: A situation may arise where you are found responsible for an injury to someone within your property who does not live in either of your homes. In such a case, this policy can help cover medical or court costs.
Generally, second homes may be viewed as riskier properties to insure. It is worse if the house is going to be vacant most of the time or located in areas prone to natural disasters.
As you shop around for the right insurance for your vacation home, it is essential to pay attention to the cost of insurance premiums. Do not be surprised that the cost of insuring your second home may be higher than what you're paying to insure your current residence. You could also try asking for a discount if you are bundling the policy with a different type of insurance coverage.
If you're looking to keep your premiums as low as possible, here are some ways that may help you shave a few bucks off the cost.
As mentioned earlier, having a second home means it will be unaccompanied most of the time. For this reason, picking the right location will help when it comes to making insurance claims. Pick a safe place free from burglary and extreme natural conditions that would likely damage your property. As a result, the cost of your premium won't be as high.
Installing smoke detectors and other fire systems, as well as ensuring security measures like a good fence and installing CCTV surveillance to your second property, may also save you money.
Different insurance companies have varying deals and terms of service. It's essential to do your research so that you can choose the best and affordable insurance premium for your second home.
It helps to know whether you will be charged more by getting a cover for your second home. The fact that insurance companies consider holiday homes more prone to risks make insuring them pricier.
The following factors may come into play when an insurance company is determining how cheap or expensive a second home insurance can be.
Reading all the terms and conditions of an insurance policy is often something you would rather skip. It is long, tedious, and borderline boring. However, it is essential to read everything carefully to know what your insurance plan covers. This decision could be the one thing that saves you a fortune in case the unexpected happens. If you don't understand what something means, ask. When you are well informed about your policy, you can easily make decisions and get better deals.
The type of home may also make a difference when purchasing vacation home insurance. A small mountain cabin, for example, may cost less to insure than a three-story beachfront home. The home's amenities can also make a significant difference. Having a swimming pool on the property, for instance, can result in paying higher premiums, as pools may increase the risk for insurers.
An unoccupied home is ready to be used as a residence, meaning that furniture is in place and utilities set up. On the other hand, a vacant house usually doesn't have any personal property contained in it.
However, vacant homes may pose a higher risk to insurance companies than unoccupied homes since unoccupied-home claims are likely to be reported earlier than those made for vacant houses. As a result, any damages that might occur, such as water backup in the house, may likely be less severe in the unoccupied property, resulting in a lower cost to the insurance company.
In most cases, determining whether your house is vacant or unoccupied will have a large effect on your insurance rates.
Insurance companies also pay close attention to the age and overall condition of the home when determining premiums. An older home may appear neglected in maintenance and will typically cost more to insure than a newer or well-maintained home.
If you choose to rent out your second home for part of the year, your second home's insurance policy may not cover damage that occurs while there is a tenant. Depending on the situation, some insurers may require you to purchase an entirely separate insurance policy when you rent out your vacation home.
If you are making plans to rent out your home one time, your insurance company may extend the protection from your current homeowner's insurance policy to the home while a tenant is staying there. Other insurance providers may require you to purchase an endorsement to the existing policy to extend that policy's coverage.
If you are considering to rent out your property multiple times to various guests, some insurers may consider it a business, requiring you to purchase a business policy to ensure your home is protected.
If you are leasing your home to one person for an extended time, you may need to purchase a landlord insurance policy.
You may also look into purchasing rent loss insurance (which covers the loss of rental income following a catastrophe or severe incident) since a homeowners insurance policy might not provide enough coverage for your rental property.
Purchasing a second home – either as a vacation getaway or a rental property – is a lot like buying a primary residence. However, there are unique risks involved with insuring a second home. We can help you make an informed decision on the best insurance cover for your second home. Get the peace of mind you are looking for by trusting the best home insurance advice.