Do you have the right secondary home insurance?
Do you have a secondary home to insure?
Many people dream of having a second residence, or secondary home. If you’re lucky enough to own one, you have important considerations that go beyond normal homeownership. You’ll need adequate secondary home insurance and maintenance to keep that protection in force. We receive hundreds of questions every year on how to insure a secondary home. We’ll look at the nuances of owning and insuring second home here.
Secondary Home Insurance
Unlike primary home insurance, secondary home insurance is designed to meet the unique needs of properties that are used primarily for vacation or rental purposes.
Moreover, secondary home insurance policies typically offer flexible coverage options to accommodate the varying needs of different types of vacation homes. From apartments, to cottages to luxury villas. This can include coverage for personal belongings, rental income, and additional living expenses incurred due to damage or displacement.
For these reasons, your secondary home insurance considerations will largely depend on what type of property you have.
An apartment is probably the easiest type of secondary residence to care for because renters insurance policies focus on two basic issues:
- The contents of the apartment (your personal possessions)
- Your liability for accidents due to your actions or negligence
Renters insurance policies are affordable and can be placed rapidly. The key is having an inventory of your belongings and their value so you get adequate coverage.
Condos / Condominiums
With a condo, the structural risks are handled by the condo owners association’s (COA’s) master policy. It’s important to coordinate your condo owners insurance with the master policy, though. Otherwise, you could be left with surprise costs in the case of fire, wind or water damage.
Be sure to carefully read through the COA’s master policy to make sure your possessions, your financial assets and any upgrades you make to the living space are covered. You can check out our blog titled What’s So Tricky About Insuring A Condo? The master policy can greatly affect how you insure your condo.
You may be especially interested in loss assessment coverage. This type of coverage steps in when there is a shared financial liability that the COA’s master policy does not adequately cover. Your agent can advise you on what it will and won’t cover based on your COA’s insurance policy and the terms of your loss assessment coverage.
Townhomes and single-family homes
Townhouses and single-family secondary homes require homeowners insurance. If you own one of these types of homes, you have important clauses to consider — especially regarding vacancy. A home that is left unoccupied for months at a time is considered a higher risk than a primary residence.
If your home is only occupied part time, you may need “unoccupied home” coverage to make sure your insurance doesn’t lapse or certain coverages get suspended.
Note that vacant-home insurance is often meant for properties that have no furnishings, such as those up for sale. Unoccupied-home insurance may be a better term for seasonally or periodically used dwellings.
Coverage for cabins also falls under homeowners insurance for secondary residences, but note any wildfire exclusions or restrictions.
If you have chosen a mobile home as your getaway, there is special coverage just for that — whether it’s on blocks or a slab. Mobile home insurance can cover a manufactured or modular home situated in a mobile home park or on a private lot.
Like other home insurance products, it covers the structure, the structure’s contents and your liability. And you can usually pick from an agreed-loss policy or a replacement cost policy. An agreed-loss policy pays up to a preset amount, and replacement cost policy allows you to replace your mobile home in the event of a total loss.
Secondary home insurance exclusions
In most cases, these protections can be bought separately or added to your policy by “endorsement.” Your insurance agent can show you your options and help you assess your risk level.
One other important coverage is sewer and drain backup. Nasty water can bubble up at any time, leaving a mess to clean up. And that isn’t covered under standard vacation home insurance. Sewer and drain backup coverage hardly costs anything to add to your policy.
Security and maintenance
With secondary homes, insurance companies want to know how much attention, maintenance and security the property receives. In some locations, theft and vandalism are high-level risks. Especially for homes that are vacant for extended periods. And in all cases, water leaks and fires are serious concerns.
The good news is that you can reduce your risk with affordable technology, and such loss control measures may reduce your insurance premiums. Some insurers will even provide or help you purchase fire and water sensors that are connected to internet apps and send alerts. The more advanced devices can even be activated to turn off water valves or dial the fire department.
Having a local property manager is also a good idea. They can make regular visits while you are away and handle routine maintenance requests as they pop up. They can also make a property look lived-in by simply grooming the yard and porch and adjusting light timers.
Know that damage from most critters is not covered under standard homeowners insurance. This is another reason to have a property or maintenance professional nearby. Wear and tear and neglect are also excluded from coverage.
For example, say a tree limb falls and pokes a hole in your roof. If you don’t repair the hole in a timely manner, rains may invade and cause substantial damage that will not be insured.
Home-sharing and renting
If you intend to let others borrow or rent your vacation home, inform your insurance agent. Guest usage isn’t usually a problem. But your insurer may require you to disclose extensive permissive use. Using the property for income may also create new insurance requirements, such as landlord insurance.
If you are going to rent your property often through Vrbo or another online booking agent, consider vacation rental insurance. This covers your risks as a homeowner and as a landlord. You need to consider how to protect yourself from income loss as well.
However you handle your vacation property, get a professional appraisal to obtain the right amount of insurance.
Underinsuring your home can leave you liable for costs you didn’t expect, well beyond your deductible. For example, your city may require you to make changes due to updated building codes. This special coverage, called ordinance and law insurance, can help you build a new roof or even fully rewire your home.
It may sound like a lot to consider, but protecting your investment will give you peace of mind and help you recover if disaster strikes.
Protecting your secondary home means securing your investment and providing peace of mind, whether you use it for personal enjoyment or rental purposes.
So, don’t overlook the importance of securing secondary home insurance and ensuring that you have proper coverage in place.
Contact Huff Insurance Today!
Want one of our Trusted Choice insurance advisors to make sure you have the right secondary home insurance coverage? Simply fill out the request a quote form or give us a call at 410-647-1111.