If you have a second home or a vacation home, it's important to have an insurance policy to protect your home and your belongings.
Some primary home insurance policies include coverage for a second home. Otherwise, you'll need to buy insurance coverage for the second home as a separate policy.
This article will cover:
Primary home insurance coverage vs. secondary home insurance
One of the key differences between a first and second home insurance policy is the coverage offered. Odds are your first home is covered by a standard homeowners policy, otherwise known as an HO-3 policy. This type of policy covers "open perils." This means that unless something happens to your home that is excluded in writing in your policy, it's covered.
If your primary policy doesn't cover a second home, you'll need to buy a second policy. Secondary home coverage is usually limited to "named perils" This means that if damage to your home and belongings is caused by something not listed in your home insurance policy, it isn't covered.
How to buy a second home insurance policy
You'll likely need to buy a separate policy for your second home. Buying a homeowners insurance policy for a second home is similar to buying a standard home insurance policy. You will need to protect your property as well as your belongings when buying a secondary home insurance policy. We recommend getting quotes from multiple insurers and comparing their policies.
There is a chance that your current home insurance policy might cover the second house. Even if this isn't the case, you may be able to purchase a liability extension for it. A liability extension is an insurance rider that increases the limit of liability coverage for your home. While this can be an inexpensive option, buying a separate policy for the second home is usually the safest route to take.
What does a second home insurance policy cover?
A secondary home insurance policy includes similar coverages as a standard home insurance policy. Coverages include:
- Dwelling coverage
- Other structures coverage
- Personal property coverage
- Liability coverage
Secondary home insurance won't cover any damage to your home and belongings caused by something not listed in your home insurance policy for a named perils policy.
Cost of a second home insurance policy
Whether you're buying a second home for seasonal getaways or to rent out, second homes have unique insurance risks. These include how isolated the house is, how often it's vacant and its distance from emergency services. Because of these risks, owning a home that is not owner-occupied may have higher home insurance costs. All home insurance companies that provide second home insurance tend to have different price increases for second homes.
Saving on your vacation home insurance
Similar to a standard home insurance policy, you may be able to save on your vacation home's insurance policy. If you have another insurance policy, such as auto insurance, you may qualify for a bundling discount when you purchase a secondary home insurance policy with the same insurer. You may also qualify for a discount if your vacation home has alarms or cameras.
Insurance risks of a second home
Insuring a second home typically costs more because of the length of vacancy and possible severe weather trends in the area.
An empty house carries certain risks. If no one is living in the house, there's no one to act when a problem occurs. If a frozen pipe bursts during the winter and no one is on hand to notice it, you may be greeted by significant water damage when you finally get to the house. If a fire starts in the house and no one knows until a car passing by calls emergency services, the home could be a total loss. Home insurers consider these risks when quoting your premium.
Chance of natural disaster
The chance of a natural disaster in your secondary home's area can increase premium prices. If the vacation or rental home is on beachfront property or in an area prone to tornadoes, for instance, a higher premium is likely.
Areas with histories of natural disasters may require extra coverage not offered by home insurance. For example, if you take out a mortgage on a home in an area known for flooding, your mortgage company may require you to purchase flood insurance.
If your vacation home is near an area prone to earthquakes, we recommend purchasing earthquake insurance. Talk to your home insurance provider and make sure your second home has the proper coverage.
Renting out your second home
If you bought the home strictly as a rental, ask your home insurance company about a landlord insurance policy. This policy does not offer the same range of coverage a standard homeowners policy does. If you're renting out the home, it no longer falls under the owner-occupied status that an HO-3 policy covers. Landlord insurance coverage includes:
- The structure of the house
- External structures on the property
- Theft, fire, wind, ice damage, and more
- Your belongings (but not the renter's)
- Loss of rental income if the house becomes unlivable
The average annual landlord insurance premium can be 20% more than a standard home insurance policy. There may also be a price difference depending on if you are renting long-term or short-term. Premiums for short-term rental insurance may be higher than long-term rentals.
Do I need a second home insurance policy?
Mortgage lenders may require you to buy a separate home insurance policy for your second home. If this isn't the case, we still recommend purchasing a separate policy in order to protect your home and belongings.
A standard home insurance policy typically won't cover two homes in a single policy. You will need a seperate policy to protect your property.
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