Secondary home insurance is coverage for other properties that are not your primary residence. Second homes can take the form of any livable structure owned in addition to your primary residence, including beach houses, condos, mobile homes, houseboats, and even buildings used as rental properties. Because vacation homes remain vacant for extended periods and tend to exist in high-risk areas, second home insurance costs more than traditional homeowners coverage.
You will need to secure secondary home insurance to protect your estate against perils like fire, lightning, and falling objects. As with primary homeowners insurance policies, you can purchase expanded protections like personal property and other structures coverage on top of your baseline liability and dwelling insurance.
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What Are The Risks Involved With Owning a Vacation Home?
From an insurance perspective, a second home presents more risks than a property inhabited year-round. Prolonged vacancies can attract burglary and vandalism and allow undetected damages from burst water pipes and infestations to worsen over time. Furthermore, homeowners hold a “duty of care” for guests and intruders injured while on their property, making them vulnerable to hefty legal and medical bills.
Since vacation homes often inhabit romantic settings like the beach or mountains, they face unique environmental threats. Over the decades, global warming has contributed to rising sea levels and more erratic weather patterns, intensifying hurricanes, flash floods, and wildfires. These heightened risks raise the costs of second home insurance and make it harder to qualify for insurance.
How Does Secondary Home Insurance Work?
Secondary home insurance, also known as vacation home insurance or seasonal home insurance, protects your secondary home from various risks and provides financial compensation in case of damage or loss. When you purchase a second home, your first step is to determine your insurance coverage limits based on your property type, included amenities, and potential perils in your area.
What Qualifies as a Second Home?
A second home is any structure with sleeping, cooking, and bathroom facilities owned in addition to your primary residence. According to the IRS, any owned property you personally reside in for 14 days or more qualifies as a second home. Even if you do not actively use or rent the property, you will need insurance protection to absorb significant repair and replacement costs otherwise furnished out-of-pocket.
What Does Second Home Insurance Cover?
Second home insurance offers the same six coverage options as primary homeowners policies and protects against many of the same damages.
Types of Coverage
For comprehensive protection, you need to customize your policy with at least some of the following coverages:
- Dwelling coverage: Protects your home’s structure and major components, such as HVAC and plumbing systems
- Other structures coverage: Reimburses the repair costs of secondary structures on your property, like fences, sheds, or garages
- Personal property coverage: Insures all items stored within your home and other structures, including furniture, clothes, sports equipment, and more
- Additional living expenses coverage: Pays for interim living expenses like storage units or hotel stays if a named peril makes your home uninhabitable
- Liability coverage: Pays the legal and medical expenses of guests or intruders injured while on your property
- Medical payments coverage: Absorbs medical fees incurred by anyone outside your immediate household who gets injured on your property
The Homeowners Policy Broad Form 2 (HO-2), typically used in secondary home insurance, protects against structural damage resulting from the following named perils:
- Fire and lightning
- Windstorms and hail
- Riots and civil unrest
- Vehicle or aircraft
- Falling objects
- Weight of ice, snow, or sleet
- Cracking, bulging
- Artificially generated electric current
- Water overflow from burst pipes and other home systems
Can You Insure Two Homes With the Same Policy?
No, you cannot insure two homes under a single policy. Every home presents unique risks, thus requiring its own specialized insurance coverage and billing structure. However, some insurance companies will allow you to bundle two separate policies for a premium discount or other bonuses under one monthly bill.
How Much Does Second Home Insurance Cost?
The price of second home insurance depends on the type of home, location, and your insurer. Regardless, these policies almost always cost more than primary residence coverage.
Average homeowners insurance for a primary residence costs around $1,535 per year, though rates vary widely from home to home and state to state. Policies for similarly valued secondary homes can cost up to two to three times more. While the numbers indicate smaller residences with fewer built-in features, average vacation home insurance rates range between $2,000-$3,000 annually.
Why Is Second Home Insurance More Expensive?
Vacation home insurance costs more than conventional policies because providers see second homeowners as more likely to file a claim, given that:
- Vacation homes often inhabit areas prone to natural disasters. For example, seasonal wildfires and storm surges can severely compromise wooded cabins and beach houses.
- Vacant homes are more likely to be broken into or vandalized. Homes with a clear human presence deter burglaries and other criminal activity from taking place.
- Issues with the property may go unnoticed for long periods. If not treated immediately, damage from burst pipes, broken windows, or infestations can quickly worsen and spike repair costs.
- Vacation homes often have more amenities. For example, liability falls on your head if a guest or intruder drowns in your hot tub or swimming pool.
Does Renting Your Second Home Affect the Insurance Cost?
Second home insurance applies specifically to owner-occupied homes, not structures designated as rental properties. If you intend to monetize your second home by leasing it to guests, you must purchase additional coverage, directly increasing overall costs.
Many companies offer short-term vacation rental insurance riders applicable toward a brief or one-time sublet. However, more frequent or long-term rentals require elevated coverage through standalone landlord insurance or a rental dwelling policy. Homeowners insurance alone does not protect you against injuries sustained by these renters or any property damage they inflict.
Reducing the Cost of Second Home Insurance
Secondary home insurance offers the same price breaks as conventional homeowners coverage. Follow these steps to secure lower premiums:
- Install security cameras, alarms, motion sensors, and smart locks to burglar-proof your home.
- Purchase smart-home systems, such as water leak sensors and FirstAlert smoke detectors, that send triggered alerts directly to your phone.
- Bundle your secondary home coverage with your primary home’s policy.
- Purchase a second home that’s part of a homeowners association. Though you must live within certain restrictions, HOA communities are typically gated and heavily monitored.
- Compare insurance quotes from multiple companies and switch policies if you find a better deal.
Should You Get Second Home Insurance?
Whether or not you want second home insurance, you may not have a choice. Most mortgage lenders will require you to secure homeowners insurance just to qualify for a loan. If you decline to act, your lender can purchase a less favorable policy and bill you for it.
Once you have paid off your loan, you can choose to forego coverage. Just remember that without insurance, you would shoulder the total cost of structural repairs, item replacement, medical bills, and legal fees resulting from natural disasters, home system failures, theft, and accidental injury. Maintaining vacation home coverage is crucial for all homeowners who want to protect their costly and hazard-prone investments.
- Reimbursement for damages caused by named perils
- Replaces and repairs property
Protects you against lawsuits
- Ability to pick and choose coverage limits
- Ability to bundle coverage
- Often mandatory
- May cost two to three times more
- Only covers named perils
- Not applicable to rental claims
Insuring your second home provides many benefits, including:
- Reimbursement for damages caused by named perils like fires, windstorms, and falling objects
- Replaces and repairs property lost or damaged due to theft or vandalism
- Protects you against lawsuits and substantial medical bills debited by injured guests or trespassers
- Ability to pick and choose coverage limits based on your home details and budget
- To save money, you can bundle second home insurance with your primary policy
- You can also reduce premium costs by fortifying your home with protective devices such as fire alarms and security cameras
- It prevents your mortgage lender from purchasing and billing you for a less-than-ideal policy
Alternatively, purchasing insurance for a second home presents a few notable downsides:
- You may not have a choice. Whether or not you want second home insurance, your mortgage lender will require it from you.
- Because of the higher risk of claims, second home insurance typically costs two to three times more than coverage on a primary residence.
- Second home insurance only covers you on a named peril basis. Damages incurred by phenomena not explicitly listed in your policy will not see reimbursement.
- Baseline second home insurance does not cover rental claims. Vacation homes doubling as rental properties require separate landlord insurance or rental dwelling riders to guarantee owner protection.
How To Get Second Home Insurance
Securing secondary home insurance should prove relatively straightforward and similar to finding coverage for your primary residence.
1. Determine How Much Coverage You Need
Take stock of your property’s net value and consider all potential risks to determine the necessary amounts and types of coverage. Your dwelling coverage limit should match your home’s total value before depreciation, also known as its replacement cost. If you have detached features like sheds or garages storing personal valuables, you should consider other structures and personal property coverage.
2. Compare Quotes
To ensure the best possible deal, gather and compare insurance rate quotes from at least three companies. The overall cost for identical coverage can vary widely between providers, and some may offer bundling discounts that uniquely benefit your situation. Proper research will help you secure a coverage-to-cost ratio that fits your needs and budget.
3. Finalize Details
Once you settle on a provider, iron out the final details of your plan. Talk to your agent about your ideal coverages and budget, potential policy add-ons and bundling discounts, and where to set your deductible. All of these factors directly correlate to your monthly premium.
4. Pay the Premium and Receive Proof of Insurance
Finally, pay your premium directly to your new insurer to begin coverage. Some providers will reward a discount to policyholders who pay their full annual premium upfront in one lump sum. If that doesn’t suit you, you can stick to a more conventional monthly billing structure. Either way, stay on top of all payments to avoid late fees or falling into a coverage gap.
What If Private Insurance Is Not Available?
Depending on your second home’s location, condition, and personal claims history, some insurance providers may elect to deny you coverage. Luckily, many states offer Fair Access to Insurance Requirements (FAIR) plans for individuals and families not eligible for insurance in the private marketplace.
These state-run, privately funded policies tend to cost more for notably fewer protections and usually make sense only as a last resort. As of today, 33 states provide high-risk homeowners insurance through FAIR.
Riders To Consider For Your Second Home
For an additional cost, insurance riders can expand coverage to include specific perils not automatically listed in your policy. As a second homeowner, consider the following endorsements:
- Boat Insurance: Homeowners insurance for a second home does not include boat coverage. Any nautical vessel docked on your property will require its own separate policy.
- Umbrella Coverage: Personal umbrella policies boost your liability coverage in million-dollar increments, ensuring significant protection against worst-case scenario injuries incurred by guests and trespassers on your property.
- Flood, Hurricane, or Earthquake Coverage: Conventional homeowners policies always exclude these three disasters from coverage. If you live in a flood-prone area, you must purchase standalone flood insurance. Similarly, if your second home sits near a faultline or an at-risk coastal area, you must secure individual earthquake or hurricane coverage.
Regardless of how or when you intend to utilize your new property, obtaining vacation home insurance will significantly protect your investment. While frequently unoccupied homes present heightened risks that raise overall insurance costs, primary and secondary homeowners policies offer all the same coverage benefits and protect against similar perils. Contact a trusted agent to determine a secondary home insurance package that best suits your particular situation.