If you're one of the lucky few who own a second home, cabin, or vacation property—congratulations—you're clearly doing something right! With that said, your good fortune does come with additional responsibilities, including, but not limited to, obtaining second home insurance.
In this article, we'll discuss the basics of second home insurance and answer some of the most common questions people have, such as:
- What is second home insurance?
- What does a second home policy cover?
- How do you insure a second home?
- Is second home insurance more expensive?
- Can a single policy cover two homes?
By the end of this article, you’ll have a better understanding of how second home insurance works and whether or not it’s the right choice for you.
WHAT IS SECOND HOME INSURANCE?
Second home insurance is a type of property insurance that covers vacation homes, cabins, and other non-primary residence properties that people typically use for recreational purposes. Second homes can be any type of property, such as a house, condo, or apartment.
Second home insurance policies are slightly different from regular homeowner’s policies in that they usually provide more comprehensive coverage and tend to involve named perils. Named perils are specific risks that are covered by the policy, while general perils are risks that are not specifically named.
WHAT DOES A SECOND HOME POLICY COVER?
While second home insurance policies vary from company to company, they typically offer broad coverage that includes:
- The main structure (i.e. the home itself)
- Any additional structures on the property (e.g., garages, sheds, boathouses, etc.)
- Personal belongings inside the property (e.g., clothes, furniture, electronics, etc.)
- Liability protection (in case someone is injured on your property)
- Additional living expenses (if you have to evacuate your home due to a covered loss)
In most cases, second home insurance will protect your property from the same sorts of incidents as your main homeowner's policy, including:
- Fire damage
- Wind damage
- Hail damage
Some companies will offer optional coverage for things like damage caused by natural disasters, accidental water damage, and theft, especially if your property is in an area where these events are more common.
Second homeowners also have the option of adding additional coverage for things like loss of rental income and personal liability, in the event that anyone is injured on your property. That's why it’s important to read through the policy carefully to see what is and isn’t covered.
HOW DO YOU INSURE A SECOND HOME?
The process of insuring a second home is very similar to the process of insuring a primary residence, but there are a couple of different ways to approach it:
- You can purchase a separate policy specifically for your vacation home, or
- You can add extra coverage to your existing homeowner’s policy. If you choose to add extra coverage, your current insurer will likely require you to pay an additional premium.
In most cases, you’ll need to provide your insurer with some basic information about the property, such as its address, square footage, and age. You may also need to provide information about the people who will be living in the home, such as their age and marital status. If you’re adding extra coverage to an existing homeowner’s policy, your insurer may also ask for information about your primary residence.
Some carriers may also require that you install centrally-monitored burglar and fire alarm systems since the homeowner is not always on the property to regularly monitor these risks. Additionally, some carriers will also ask that you install temperature and water monitoring systems to detect any leaks or pipe bursts.
IS SECOND HOME INSURANCE MORE EXPENSIVE?
Typically, yes, second home insurance policies cost more than regular homeowner’s policies, so it’s important to shop around and compare quotes before you buy. This is because vacation homes are statistically more likely to suffer damage or loss than primary residences.
Two states in particular—Florida and California—are especially difficult to insure, as many carriers are unwilling to take on the risk at all. Many Florida vacation homes are near the coast, in areas that have been historically prone to hurricane/wind damage, whereas California homes are more susceptible to earthquakes and wildfires. Those carriers that do offer policies will typically require higher premiums, stricter guidelines, and certain deductibles/limits in order to write it.
That said, the added coverage and peace of mind that a good second home policy can provide is absolutely worth the extra expense. The cost of second home insurance can vary significantly, depending on a number of factors.
These factors may include:
- The size of the property
- The location of the property
- Whether it's on (or near) a large body of water
- The amount (and types) of coverage you purchase
- Your insurance company’s current rates
CAN A SINGLE POLICY COVER TWO HOMES?
In most cases, no. Second home insurance policies are designed to cover only secondary residences, not primary residences and secondary residences simultaneously. However, there are a few companies that do offer multi-policy discounts for people who insure both their primary residence and a secondary home with the same insurer.
If you’re looking for coverage for both your primary residence and a secondary home, it’s best to speak with an insurance agent to see what options are available.
WILL SECOND HOME INSURANCE COVER A RENTAL PROPERTY?
Thanks to popular vacation rental apps like Airbnb and Vrbo, many people are becoming interested in renting out their second home, so it’s important to know that many second home policies won’t suffice for this type of activity. These short-term rentals would fall under stricter underwriting requirements compared to a property that is rented on a longer-term agreement (i.e., the occupants are in the unit for at least six months of the year).
You would also need to consider the insurance requirements set by those apps and make sure the policy satisfies those specific needs. Because of the admittedly challenging nature of these policies, Airbnb offers its own insurance platform for properties whose sole purpose is for renting through their app.
SPEAK WITH A SECOND HOME INSURANCE EXPERT TODAY
Do you have questions about second home insurance? Our experts are here to help. Give us a call today to learn more about what our policies cover and how we can help protect your investment.
At Christensen Group, we take a unique approach to insurance, and you’ll experience the difference immediately. Not only do we take the time to get to know you and your unique needs, but we also have extensive experience on all sides of the negotiating table – underwriter, adjuster, broker, and even buyer. In other words, we know where the rakes are and we’ll make sure you don’t step on them.