More and more Americans are trying to get a cozy piece of real estate somewhere besides the sea or on a mountain. There’s something magical about the smell of sea spray unlocked by a second home that you inherited or bought. But it comes at a price, which is the need for homeowners insurance for a second home.
Unfortunately, standard home insurance cannot apply to secondary homes, so you’ll need a separate one for your getaway property. But don’t worry, we’ll walk you through all the nuances of selecting your second home insurance. With no further ado, let’s dig into it.
Just like the name of this type of insurance suggests, second home insurance, or vacation home insurance, is coverage for your properties – your second, third, fourth, etc. home – located separately from your primary residence.
As per the laws of the United States, you cannot include your second home in your standard policy because of the increased risks of owning a second home. From fires to burglary to other damages, anything can happen while no one is around, and this higher risk is always reflected in second home insurance policies.
If you’re a citizen of the world and cannot decide which of your residencies is your second home, then proceed by determining the following:
Still unsure? Then refer to an insurance agent or ask your own.
Second home insurance provides the same coverage as standard home insurance, but at a higher cost due to the higher risks that a second home bears.
A typical second home insurance plan includes:
Keep in mind that every policy has a limit, and everything not covered is paid out of pocket. Or – if you don’t want to bear such risks – you can purchase extra coverage (for example, umbrella coverage) or riders to get the type of coverage and limits that you would feed safe with.
An extended second home insurance plan may include:
Important: your basic home insurance liability coverage may extend to your second home, so make sure to review your policy. Also, pay special attention to whether the coverage applies to risks posed by particular items at your second property (pools, fire pits, etc.). In general, insurance for a second home is more sensitive to the aforementioned perils, meaning that any perils that are not mentioned in the policy will likely not be covered.
There are a few types of coverage that are usually excluded from standard second home insurance, but which you may need. These types of coverage include:
Second home insurance may even cover damage caused by pets, defective design, and anything else that you want to cover or safeguard against. No matter the coverage you’re looking for, there’s always an insurer that will deliver what you need.
There are three main factors affecting the price of second home insurance:
To save on your premium, choose the right location, only the amenities you need, and make sure the house was built using cost-effective materials. Also, you can save on your second home insurance by bundling policies or installing security systems on your property should the respective discounts be provided by your insurance company. Finally, you can adjust your amount of coverage, deductible, and premium, the three parameters that correlate with each other within any home insurance.
When shopping around for the best deal, make sure the insurance covers everything you want to cover (otherwise, consider buying riders) and has a reasonable coverage limit, premium, and deductible. Also, look for bonuses and discounts. Many insurers will allow you to bundle policies (for example, home and auto insurance) or save by installing security systems on your home.
The cost of homeowners insurance for a second home is greater than that of the primary home because second home insurance runs a higher risk for insurance companies.
Riders may be of value if you want to get coverage for a particular case excluded by your standard plan. Riders can cover almost anything and usually have a low deductible. But then again, whether this or that rider makes sense depends on your needs, budget, and risk tolerance.
The cost of a rider is a percentage (usually, one or two percent) of the value of the covered item. For example, if you cover a pendant worth $1,000, you might have to pay $10 to $20 for it.
Holiday homes and second homes are not the same. A holiday home usually has longer periods when it is unoccupied, which is a higher risk for insurance companies. When buying a policy, explain to the insurer how you will use the home. Some insurers may require a weekly inspection or put forward other conditions and limitations.
Renting out a house is considered commercial use and should be covered separately. Therefore, if you rent out your second home, a standard policy will not cover it.
This complex question requires assistance from an insurance agent or lawyer. Without proper adjustments from your insurance company, you or the trust may be left partially or fully uncovered.
Oleksandr is an expert in deep research. He covers various insurance topics across verticals, adopting to every local law.
