Insuring a second home or vacation house can be complicated. Let's review some tips.
Owning more than one home comes with some special insurance considerations. Is the property a vacation home or a dedicated rental unit? Is it a condo in the city or a coastal bungalow? Will it go unoccupied for long periods of time? Each of these situations presents unique insurance needs.
We’ll review these scenarios to help you navigate the process of insuring your second home.
Vacation homes are often located in unique places. Whether your secondary dwelling is a mountain cabin, beach house, or a unit in a high-rise apartment building, you’ll need to carry coverage specific to the environment and structure. If you own a beach home in Florida, you’ll need to make certain your home insurance covers damage caused by hurricanes. Similarly, homes in locations prone to earthquakes, wildfires, or other natural disasters may require special coverage options.
Few standard insurance companies provide coverage for these perils. Depending on your location and insurance company, you can add optional coverages. While some luxury home insurance companies provide flood insurance, you’ll find premiums for such policies can be more expensive. Otherwise, flood insurance is only available through the National Flood Insurance Program (NFIP).
Earthquakes are another peril not often covered through standard insurance policies. In a state such as California, where earthquakes are a particular threat, coverage can often be obtained through the California Earthquake Authority. Earthquake coverage is also available in other states more prone to earthquakes, including Hawaii, Alaska, Missouri, Kentucky, Idaho, Illinois, Montana, Tennessee, Utah, Wyoming, Nevada, and South Carolina.
The short answer: no. As every home has unique coverage needs, it’s not possible to insure two homes under the same policy. However, some companies may allow you to bundle policies to pay one combined premium and — in some cases — one deductible. Not all insurance companies will offer such an option, so be sure to consult your insurance company about bundling options.
Insurance companies classify a property to be vacant or unoccupied after 30 days of continuous non-residence. There are, however, differences between vacant and unoccupied. Vacant homes are largely empty of personal belongings while unoccupied homes often have furnishings or other property. Both, however, are less than optimal in the eyes of insurers.
Unoccupied or vacant homes can sometimes cost more to insure than do occupied dwellings. Insurance companies believe empty homes are at a greater risk of sustaining damage via vandalism and break-ins. Furthermore, problems that arise — such as leaks — could go unnoticed for long periods of time, becoming much worse.
For people interested in earning an income from their second home, insurance should be a primary consideration. If you're earning money from your property, standard homeowners insurance policies may not provide ample coverage.
If you plan to rent your property out long-term, consider a landlord policy. Renters are responsible for covering their own personal belongings, but a landlord policy will protect the structure itself and furnish liability coverage.
Short-term rentals, through companies like Airbnb, come with other insurance requirements. While many homeowners insurance companies allow for the occasional rental, if you plan to rent the property regularly, you’ll need to add coverage. Failure to abide by the rules set out in your home insurance policy could lead to your coverage being voided.
Home-sharing insurance is available from a few different providers. Some standard home insurance companies offer the coverage as an endorsement while others specialize in short-term rental coverage. Many short-term rental companies also provide coverage of their own, though options can sometimes be limited. The insurance costs of a home-sharing rental property can vary from one company to another, so it’s worth looking around for the best deal.
If your second home is a condo, you should consider a condo insurance policy. This policy type differs from standard homeowners policies in that it only covers the internal portion of a home: interior walls, floors, and built-in features such as cabinets. Otherwise, condo insurance is similar to standard homeowners coverage in that it provides protections such as personal property coverage and liability. Condo owners must typically be members of a homeowners association (HOA), which provides coverage for common areas such as shared hallways, elevators, and stairways.
The insurance costs of covering a second home can be influenced by a number of features. This includes location, the age of the property, the building materials used, and how long the property goes unoccupied.
Below are a few ways to save on second home insurance premiums.
Owning a second home may influence your choice of home insurance company. Many standard home insurers may offer multi-property bundling options, but you’ll need to consult each company to gauge eligibility. Some companies, however, are more receptive to policyholders with multiple properties and the unique needs that come along with them.
Chubb Insurance, for instance, provides a Property Manager Service for clients with homes in hurricane-prone regions. Chubb's program sends professionals to the impacted property to evaluate damages. AIG is another provider accustomed to working with clients who own multiple homes.
If your second home is located in a flood-prone or coastal area, consider purchasing flood insurance.
When thinking of buying a secondary home, properly insuring the property should be one of your considerations. Speak with your current home insurance company to get a better understanding of the company's coverage options. Once you have a good idea of the company's offerings, shop for the best coverage and rates to make sure your home and personal property are sufficiently covered.