Vacation Home Insurance: How To Insure Your Second Home

Owning a vacation home may be one of your big financial goals, and it’s important to make certain that your investment is protected. Having the right homeowners insurance can ensure that your vacation property is covered against damages from fire, wind, and other perils. In most cases, you’ll need to purchase a separate policy to cover a second home.

If your vacation home has a mortgage, your lender may require property insurance as a condition of borrowing.

What Is Vacation Home Insurance?

If you plan to buy a second or vacation home, you’ll most likely need vacation home insurance. This is a type of homeowners insurance policy that covers a home you own but don’t live in full-time. 

Vacation homes are typically viewed as being higher risk by insurance companies because they aren’t occupied all of the time. If you own a beachfront home, for example, the risk of theft or vandalism may be higher if you and your neighbors only visit periodically. Likewise, it may take longer to detect water damage with a second home that’s left unoccupied, which could increase the likelihood of the insurance company having to pay out a claim for damages. 

What Does Vacation Home Insurance Cover? 

A vacation home insurance policy isn’t exactly identical to traditional homeowners insurance, as the home isn’t being lived in all the time. Instead of covering all the things that a typical homeowners policy might cover, your insurance company may build your policy around named perils only.

This means the policy for your second home will list a specific set of events that are covered, which may include damage from: 

• Fire and smoke
• Lightning
• Explosions
• Theft

Liability coverage may also be included, which would cover any personal injuries sustained by someone while they’re on the property. The policy could include medical payments coverage as well to pay for someone’s medical bills if they’re injured. Still, it’s possible that if you already have a homeowners insurance policy in place for your primary residence, your insurer could extend those coverages to a vacation or second home.

How Much Does Vacation Home Insurance Cost?

Vacation home insurance could end up being more expensive than your regular homeowners insurance, depending on the type of coverage you need. There are a number of factors that influence your premium costs related to the home, including:

• Location—Vacation or second homes in areas that are prone to flooding, hurricanes, or other natural disaster-related events may come with higher premium costs. A home that’s located in an area that experiences earthquakes, forest fires, or mudslides could also be more expensive to insure.
• Condition and Age—Aside from location, insurance companies also look closely at the age and overall condition of the home when determining premiums. An older home that’s been neglected in terms of maintenance or upkeep will typically cost more to insure than a newer home or one that’s been well maintained.
• Property Type—The type of home can also make a difference when getting vacation home insurance. A small mountain cabin, for instance, may cost less to insure than a three-story beachfront property. The home’s amenities can also make a difference. Having a pool on the property, for instance, can result in paying higher premiums, as pools increase risk for insurers.

It’s important to keep in mind that vacation home insurance might also require secondary coverage, depending on where the home is located. If you have a beachfront home or a second home located near a lake or river, you may need to get a separate flood insurance policy. Keep in mind that flood insurance may have its own limits with regard to what’s covered and what’s not.

If your vacation home is at risk of damage from hurricanes, you will want to be sure that you have enough coverage in place to protect your investment. Your standard vacation home policy may not cover all hurricane damage, but hurricane policies do supply this protection.

Renting Out a Vacation Home

Owning a vacation home can be great when you need an escape from the hustle and bustle. You may also view it as a potential moneymaker if you can rent the home out when you’re not using it. Still, it’s important to know that doing so could require you to purchase additional home insurance coverage for liability, bodily injury, and medical payments. Also, more coverage means paying higher premiums to insure your second home. 

Depending on how long the home will be used for rentals, you may need a short-term or long-term rental insurance policy. It’s possible that your insurance company may allow you to add an endorsement to an existing policy for short-term rental coverage.

You should also be aware that rental coverage protects you as the homeowner but not your renter’s personal belongings. For that reason it may be wise to encourage renters to purchase their own renter’s insurance policy to protect themselves against losses.

How To Buy Vacation Home Insurance

If you’re planning to buy a vacation or second home, purchasing insurance for it is similar to buying homeowners insurance for a primary residence. It starts with doing some comparison shopping. When comparing policies from different insurers, it helps to look at:

• What is and isn’t covered
• Any exclusions related to specific property types or amenities on the property
• Premiums and deductibles
• Discounts you may be able to take advantage of to reduce your premium costs

Depending on your insurer, you may be able to lower your premiums for second home insurance by bundling policies or installing a home security system. Likewise, your insurer may offer discounts for installing smoke detectors or carbon monoxide detectors. Asking about these and other discounts that may be available before you buy can help you find the best deal on vacation home insurance.