Insuring a Vacation Home

Like any residence, your vacation home needs to be insured—but because the risks are different, the coverage might cost more than your primary homeowners policy. Before you leap into second-home ownership, consider the factors that will likely affect the price you’ll need to pay for insuring it.

Second homes provide a respite from weekday life, and may even be a good investment. They also, however, present more of an insurance risk than your primary residence—the fact that you don’t not physically occupy your second home as frequently puts it in more danger for theft, vandalism and easily undetected damage, like burst water pipes.

While the homeowners policy for your second home will provide the same types of coverage as your primary homeowners policy, the following factors will likely impact your insurance costs:

• Location is always a factor in homeowners insurance costs—for example, you need additional insurance if your dwelling is in a flood- or earthquake-prone area. With vacation homes the very location that makes a place desirable may also make it more expensive to insure. For instance, a ski house or hunting lodge in a remote or mountainous area could be at greater risk for damage due to wildfire. A beach house may be more exposed to wind damage or storm surge from a hurricane. These location-based risks will impact the price of coverage, and in some cases may even incur higher deductibles.
• Type of property. As with any house, the age and type of building materials used in a vacation home will impact the cost of insurance. What's also important is whether your second home is a single-occupancy house, a condominium or a townhouse. A condominium in a ski resort area, for instance, may have lower insurance costs than a stand-alone chalet. This is because a homeowners association maintains the property, and may provide some security. Importantly, the association insures the exterior of the property (the cost of is generally included in the monthly maintenance fees). Your personal condo insurance will cover the specific areas of the unit listed in the policy, as well as your belongings.
• Amenities. Though wonderful for relaxation, pools and hot tubs add risk to your second home. If your vacation residence is equipped with these or other special amenities, you may pay a higher insurance premium and you should also consider additional liability protection, which will increase insurance costs, as well.

There are steps that you can take to help make the cost of insurance more affordable.

• Choose a location with less risk — A home further from the beach won't be as susceptible to storm surges, for instance.
• Bundle your policies — If you insure your second home with the same insurer that provides coverage for your primary residence, you may be able to save on premiums.
• Install an alarm system — A centrally monitored alarm system that detects both fire and break-ins can help lower the cost of insurance.
• Shop around — Get at least three quotes for the coverage on your second home; review the policy costs before you renew each year to see if you can get a better rate.

If you plan to rent your vacation home to others, your homeowners insurance costs will likely increase, and you may need to purchase additional coverage.

Because renting your second home entails additional, more complex risks, it’s a good idea to consult with your insurance professional and learn more about coverage for renting out your home to others.