Key takeaways:

  • A vacation home usually requires a separate homeowner’s policy
  • Vacation home insurance often only covers named perils
  • The location, type, and age of the home may affect insurance rates
  • You may need short-term or long-term rental insurance if you plan to rent the property
  • Rental insurance only covers your property and not the belongings of renters
  • Check local ordinances and laws if you plan to rent through a platform, like Airbnb

Millions of Americans own a second home that they use for vacations or renting out for extra income. If that describes your circumstances, you have some unique insurance needs. 

Do you know how much insurance you need for a vacation home? What are the rules about insuring a home you don’t live in full-time? What if you plan to rent the property for short-term or long-term vacations? 

We take a look at vacation rental home insurance, how it works, and what it covers.

Does primary homeowner’s insurance cover a second home?

In most cases, you’ll need a separate insurance policy for your second home. If you carry a mortgage on the vacation home, the lender may require you to have property insurance. Even if insurance is not required you will want the assurance that you can pay to repair or replace your property in the event of damage from water, fire, wind, or vandalism. If your vacation home is in an area that experiences natural disasters like hurricanes or earthquakes, you may need a separate policy to cover that type of damage.

Note: Check with your insurance company to see if your homeowner’s policy can be extended to a second home. Check the terms and details, including coverage limits, exclusions, deductibles, and premiums. 

Understanding vacation home insurance

A vacation home policy is designed to cover a second residence that you only live in for part of the year. You might find these policies are more expensive than the one for your primary residence. That’s because insurance companies believe there is a higher risk of damage to a home that sits unoccupied for long periods. It might take months to discover a water leak, for instance. The longer the damage is allowed to accumulate, the higher the claim. 

What does vacation home insurance cover?

The homeowner’s policy for your primary residence covers physical damage to the property, as well as your belongings, such as furniture, electronics, computers, appliances, and clothing. Vacation home policies generally only cover named perils

Named perils may include:

  • Fire/smoke damage
  • Lightening 
  • Explosions
  • Theft/vandalism

Some policies also include liability insurance to cover personal injuries to others who might be staying on the property or renting the home. A liability policy will pay for medical bills or lost wages. 

Cost of vacation home insurance

As we mentioned, the premiums on a vacation home insurance policy may be more expensive than the ones for your primary residence. The cost will depend on the type of coverage you need, as well as other factors, such as:

Location – A home in a flood, hurricane, or earthquake zone will generally result in higher premiums. 

Condition and age – The age and condition of a home matter when buying a policy. An older home may require more maintenance and upkeep, making it more expensive to insure.

Property type – The type of property will also have a lot to do with the cost of the plan. A small mountain cabin may cost less than a beachfront home. A condo that includes security and a property manager may be less than a single-family home. Amenities such as a pool may affect the cost of insurance, as well. 

Renting out your vacation home

If you do plan to rent out the home to vacationers, you may need to look into buying a short-term or long-term rental insurance policy. The other option is to add an endorsement to the existing vacation home policy to cover short-term rentals. 

Note that these policies are designed to protect you (the homeowner) and not the personal belongings of potential renters. It’s a good idea to have them buy renter’s insurance. 

Note: If you plan to rent your second home via a platform like Airbnb, check the local ordinances and zoning laws. Some counties and municipalities have passed rules that prohibit or severely curtail short-term rentals. 

Buying a vacation home policy

When buying a policy for your second home, shop around and compare different policies. 

Things to compare:

  • What is/isn’t covered
  • Exclusions related to property types or amenities 
  • Premiums & deductibles
  • Discounts that may help reduce your premiums (for things like a security system, smoke detectors, and carbon monoxide detectors)

It may be possible to bundle a vacation home policy with your primary homeowner’s insurance to reduce your costs. 

Avante Insurance can help you find the right insurance coverage for your primary and vacation home, as well as your car. If you have questions about your insurance coverage or you’re interested in a quote, contact us today.

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.