Everyone needs some time off once in a while. Just make sure your vacation doesn’t add anything onto your insurance premiums.
Over 9 million Americans own a second home, and according to fact giant Statista, Americans top the global revenue charts for vacation rentals. There are different insurance rules in place based on if you own the home or rent it out, and it pays to know which apply to you.
If you own the property, you should cover it as much as you can. You’ll want the comfort of knowing that any damage you may inadvertently cause (or suffer) will be covered. Let’s look at the reasons to have vacation home insurance and the steps you can take to keep your holiday hazard-free.
Unless you rent it out regularly, your vacation home will most often be empty
An empty home is a magnet for vandals. If you’re a second-home owner, you must seriously consider how vulnerable that seasonal property is. When a primary residence is occupied, it offers a mostly constant presence that helps to deter intruders as well as limit anything going wrong with the house internally (such as plumbing or power problems).
Because a second home spends most of the year empty, it’s at greater risk and costs more to insure than a primary residence. This may discourage multiple homeowners from paying the extra expense, but like all insurance, the cost of premiums is far lower than the potential price of no coverage.
How vacation home insurance works
Taking out a separate homeowner’s policy for the secondary residence covers all the classic insurance bases such as named peril (elemental and natural damage like fire, wind, hail, and lightning), replacement cost, liability coverage, and personal belongings. This insurance can be as comprehensive as you choose to make it, but with the caveat of more expensive premiums due to it being a secondary residence.
If you can prove to your insurer that your vacation home is occupied from time to time (by friends, family, tenants, or perhaps a regular caretaker), this will go some way to making them consider lowering your premiums. The greater the presence on the property, the lesser the chances of a hazard or break-in going unnoticed.
Like any home, the installation of a security system will reflect favorably on your premiums because you’ve shown you’re taking steps to mitigate the risks of burglary. Depending on your insurer, you may qualify for a bundling discount if you insure both homes with the same provider.
What if I’m renting out my vacation home?
If you rent your second property to others even for a limited time, they’re classified as your tenants. As such, you may be required to have a landlord insurance policy. This type of policy is designed to protect the home in the typical ways we mentioned above, but also to doubly protect you as its owner.
If tenants damage your vacation home, it can mean more than the cost of repairs. Depending on the severity, you may have to close the property until repairs are completed. If that’s the case, then it means the loss of potential income you’d have generated had the home been available.
A guest being injured while on your property can be a very expensive matter to settle, regardless of primary or secondary residence. What’s best to ask your insurer is how frequently you rent affects your policy. Is it a few weekends a year? A month? Longer?
The greater the rental period, the more you might consider taking out a business insurance policy. Again, double check with your provider about how many rental days constitute a business matter in their estimation.
How location and layout affect vacation home insurance
It’s not uncommon for vacation homes to be on either coast. If your property is in Florida or California for example, it’s at greater risk of floods, earthquakes, and hurricanes. A big attraction of most vacation homes is their isolated location. Such homes may reduce the coastal hazards, but a wildfire, landslide, or even an avalanche can swiftly put an end to the serenity.
Major natural disasters require their own additional forms of insurance. The structure of your second home will affect the insurance, so ask your provider how being a chalet, townhouse, condominium, or other type affects the policy.
If your vacation property offers perks like a hot tub or swimming pool, you may want to consider additional liability protection or umbrella policy to protect you in the event of an injury claim. This will add to the overall cost of your premiums, but when we consider how a liability claim could possibly run into the millions, it’s a small price to pay for peace of mind.
Avante Insurance is a South Florida family-owned and operated agency providing many services to meet customer’s individual needs. If you need insurance advice, call us at 305-648-7070, request an insurance quote, or contact us with any questions or comments.