Secondary Residences

Anyone purchasing a vacation or second home or condo needs to consider the risks and insurance costs that come with them. Many factors go into pricing home insurance, and the quotes for a secondary home are almost always higher than if the same home was your primary residence. The reason is that having someone inside a home, helps protect it against perils and deters burglars.

Do not falsely state or mislead your carrier to think that your secondary home is your primary home. The savings on your insurance is not worth the risk. If you need to file a claim for your vacation home and they discover you lied about its status, your home insurance company would likely deny your claim and either cancel or not renew your policy. It makes no sense to pay for a policy that could deny you coverage based on this reason alone.

In addition to a home insurance policy for your secondary residence, you should consider whether you need flood and earthquake coverage for it. Flood and earthquake damage are not covered by standard home insurance policies but might pose a serious risk to your vacation home, depending on where it is located. For example, say you have a beach house on the east coast of Florida. A storm surge (an abnormal rise in tide) from a hurricane might easily be able to flood and damage your property. Or, your southern California retreat might be in a high hazard area for earthquakes. You should consider this before purchasing a vacation home because the price of either of these additional insurance policies can be quite high. In California, the average cost of earthquake coverage is $1.75 per $1,000 of coverage, meaning a $250,000 home would cost $437 per month to cover. Remember, that monthly premium would be in addition to the cost of your standard home insurance policy.

What if I want to rent out my vacation home? Renting out your vacation home is a great way to offset the cost of owning one but you need to make sure you understand the insurance ramifications before doing so. Depending on the frequency and length of stays, you might need to notify your carrier or purchase a separate landlord insurance policy.

If you rent out your home a few weekends each year through a service such as Airbnb, you may be covered or may be able to add an optional coverage endorsement to your current policy. But if you rent your home for weeks at a time throughout the year, you will need to notify your insurance company, and there will likely be a surcharge to the premium of the policy covering the home, or you may need to move to another insurance program. If you rent your home for extended periods, especially to a single tenant, you will need to consider commercial or landlord insurance.

If you’re thinking about renting someone else’s vacation home for a short period of time, you may already have the coverage you need through your existing home or renters insurance policy. Most companies include “off-premises” coverage for the personal possessions of the policyholder. Check with us to see if your policy includes this coverage and make sure you fully understand the limits and details.

Let us protect your seasonal/secondary home with confidence. We can help you choose the right coverages for your secondary home needs. We have a market for your coastal properties too!