Second Home Insurance: What You Need to Know

Oct 6, 2021 | Personal Insurance

Today we tackle the nuances and what you need to know about getting your second home’s insurance.

Having a Dream Vacation or Second Home

Houses are a big investment. If you have one already, you are considered lucky. And if you are able to purchase that second home you have been dreaming about, you are definitely blessed. Owning a second home near the beach or somewhere in the countryside is what most Americans dream of. It can serve as a vacation home every time you need a break from the city life, a change of scenery, or earn a little income on the side if you plan to rent it out. 

Just like your first house, having a second home is a big investment and a responsibility as well. It is but natural that you want to protect your second home and all the things inside. If you have home insurance for your first home, you definitely need second home insurance for your vacation home. 

What Is Second Home Insurance?

Second-home insurance covers another property that is not your primary residence. It is basically the same as your primary home insurance with coverage for your property and possession from fire, theft, and disaster-related damages. It also has personal liability coverage for injuries caused by accidents in your home. 

But since a second home is not lived in full time, it is more prone to burglaries, fire, and other threats to homes. This would make a second home riskier to insure and the cost would be higher than your primary home insurance. 

Factors That Affect The Cost of Second Home Insurance

  1. Location

The location of your second home is the most important factor. You may need additional coverage if it is located near the beach or in a flood-prone area. The heightened threat of hurricane and storm surge makes it riskier to insure. A property located in a mountainous area is at risk of damage due to wildfire. These locations will greatly impact the cost of premiums and sometimes will require a higher deductible as well. 

  1. Type of Property

The type of home you purchased will also impact the cost of your premium. A beachfront property will cost more than a condominium in a resort. A small cabin in the woods can cost more than a resort condominium too. This is because condominiums have property managers or homeowners associations that may provide security.

  1. Age and Condition

An old home with little maintenance will cost more to insure than a brand new house. 

  1. Amenities

Features of the house have a great impact on premium cost. If you have a swimming pool, sauna, and bathtub which are all accident-prone amenities, you will need to pay more. 

  1. How Often the Home is Occupied or Lived In

How often you go to your second home or how much it is lived in also affects the price of your premium. 

What Does Second Home Insurance Cover?

The type of coverage for your second home usually covers:

  1. Dwelling

This pays for the repair of the rebuilding of your home’s physical structure. Damages caused by fire, smoke, explosion, theft, vandalism, and falling objects are just some of the events that are included in the list. 

  1. Other Structures 

Also known as coverage B, this policy covers other structures within your property other than the house itself. Any structure that has a space between it and your main house is considered as other structures. This includes:

  1. Swimming pool
  2. Shed
  3. Detached garage
  4. Driveways
  5. Gazebos
  6. Fences
  7. Personal Property

Any possession or belongings you have are covered by second home insurance. It includes things like:

  1. Clothes
  2. Television
  3. Mobile Phones
  4. Computers
  5. Refrigerator
  6. Jewelry
  7. Paintings
  8. Sports Gear and Others
  9. Personal Liability

This covers medical and legal expenses when someone makes a claim or sues you for bodily injuries or property damages. That is if you are legally responsible or liable for the injury or damage. For example, if a pizza delivery guy tripped while walking to your front porch because he was texting, you are not liable for his carelessness. But if he tripped because of your slippery driveway, you can be held responsible. 

  1. Loss of Use

If your home is damaged making it uninhabitable while being repaired or rebuilt, loss of use will pay for additional living expenses. You can reimburse for:

  1. Place Rental
  2. Food
  3. Laundry
  4. Groceries
  5. Storage and More
  6. Medical Payments

This coverage is for when someone gets injured at your home regardless of who is at fault. It helps pay for:

  1. Hospital bills
  2. Ambulance
  3. Surgery
  4. Dental services
  5. X-rays
  6. Prosthetic Devices
  7. Funeral expenses in case of death

How to Save on Second Home Insurance

If you are close to buying your second home, consider the following to save on home insurance:

  1. Avoid high-risk areas. Steer clear of houses that are located in disaster-prone areas. 
  2. Buy newer houses. Vacation houses that are old and in need of repair will cost more to insure. 
  3. Consider buying a home with HOA or a homeowner’s association. HOA will add security to your property

But if you have already bought one, you can still lower your second home insurance by:

  1. Installing a central security system like a burglar alarm and smoke detectors
  2. Bundling your second home insurance with your primary home insurance
  3. Asking for quotations from other insurers. You may get a better deal if you get from another insurer than bundling it with your primary home insurance.
  4. The remaining is claim-free. A relatively free claim record can get you additional discounts. 

Other Coverage You May Need to Purchase with your Home Insurance

Even if you plan on using your second home as a vacation house, basic second home insurance might not be enough to protect your property. There are other coverages you may need to complement your standard insurance. 

  1. Flood Insurance

Flood, hurricane, earthquake is oftentimes not included in standard second home insurance. The need for flood insurance will depend on the location of your property. Talk to your agent before deciding to purchase this coverage. 

  1. Umbrella Insurance

This coverage acts as extra insurance for when existing limits and coverages of your policies are not enough. It protects you and your assets from unforeseen liabilities and suits. 

  1. Hidden Water Damage Insurance

Damages did by hidden water leaks in walls, ceilings, or floors. Very seldom do people purchase this coverage because they are not aware that this exists. This is different from the water damage normally covered by home insurance.

Renting Out Your Second Home

If you plan to rent out your second home whether short-term or long-term, you will need to tell your insurer and purchase additional coverages to protect you and your property. There are several types of insurance that can safeguard you from out-of-pocket expenses:

Landlord Insurance

Your second home insurance will not protect you if you plan to rent out your second home to a person for a long period of time. You will need landlord insurance which will cover:

  1. Property Damage – covers for damages to your home caused by fire, theft, and other natural disasters
  2. Liability Insurance – covers medical costs, legal fees, and other settlements if your tenant or visitor is injured in your property due to poor maintenance
  3. Lost Rental Income – income lost if your home is damaged and uninhabitable will be reimbursed in this type of coverage. 

Business Insurance

If you rent out your property frequently for short periods of time, it will already be considered as a business thus requiring you to have a business insurance policy. There are different types of business insurance and you can ask your insurance agent which type is the best for your rental property. 

Renter’s Insurance

Most landlords require renter’s insurance from their tenants because landlord insurance does not cover the personal possessions of their renter. It is up to the tenant to purchase their own insurance for financial protection. A renter’s insurance typically covers:

  1. Personal possessions

Covers the cost to repair or replace your belongings, furniture, electronics, and other personal possessions

  1. Liability

Covers for injuries and damage to properties of visitors

  1. Additional Living Expenses

Covers for bills incurred when the rental house is deemed uninhabitable or is undergoing reconstruction. This will include temporary hotel bills, groceries, and food. 

Final Words

Whether you bought a second home as a vacation house or as an investment, it is important that you keep it protected just like your primary residence. Second-home insurance will help you from financial losses in case of an accident or disaster. It will protect your property and your possessions. 

And if you are looking for a great agent to guide you in the process, contact Advantage Insurance Solutions (AIS). They are a team of dedicated and knowledgeable service professionals who can find you the best coverage for all your insurance needs. Contact them at (720) 221-8168 or you can send your inquiries to info@teamais.net