Do you own a vacation property?
Whether you have a second home or condo, there are a few important tips to consider when it comes to getting the right home insurance. For example, is it primarily your vacation property, or is it a vacation rental property?
What difference does it make?
Plenty. Think of it this way, if you rent your property out for people to use at least some time during the year the type of risk you face is very different compared to owning a vacation property that is only used by you, your family and friends.
Tips to insure your second home
The first tip to keep in mind is that your standard homeowners insurance policy may not be enough to protect your second home.
For instance, is it located near the beach? Or lake?
If it is located near water (which is often the case) you may need flood insurance to provide adequate coverage in case of water damage. Additionally, homes located in coastal areas may not be protected against wind or storm damage through your standard home insurance policy.
So it pays to get this checked out.
Next up, if you often invite friends and family to vacation with you it makes good financial sense to carry additional liability insurance. After all, you wouldn’t want a simple slip and fall to turn into a financial disaster for you and your family, right?
Coverage options to consider
If your second home is often rented out during periods of the year you should get additional insurance coverage.
Renting your property may prove lucrative, but it does create more potential risk that needs to be considered, and protected against. Many more second homes are becoming investment rentals in the last few years – with owners unable to sell their properties.
Something seasonal landlords might consider rather than Landlords Property Insurance is a “term” insurance rider. This insurance would cover each rental term that can be an add-on to the rental agreement for $39 to $59, and will provide between $1,500 to $5,000 in coverage for contents of your second home, including electronics, china, and basic furnishings.
You will still need basic vacation property insurance.
When it comes to your typical vacation home insurance options it’s important to understand the available coverage options and what they are designed to cover, such as:
- Comprehensive Property Coverage: protects against most direct, sudden, and accidental physical losses that aren’t excluded in your policy.
- Named Peril Coverage: protects you from all perils – fires, explosions, lightning, wind, hail – specifically listed in your policy.
- Liability: provides coverage if you’re found legally responsible for accidental injury to someone staying in your vacation home, and protects you if that individual causes damage to your neighbor’s property.
- Actual Cash Value: covers the cost to replace or repair your damaged property. This amount is deducted for depreciation and is based on the current age and condition of your vacation home.
- Agreed Loss Settlement: covers the insured value of your seasonal home, minus any applicable deductible.
Additionally, please keep in mind that basic policies don’t cover high value items such as expensive electronics, artwork and business property liability.
Like any insurance policy, there are opportunities to save on your insurance premiums. When reviewing quotes, be aware that you may be eligible for discounts of you have multiple policies with one company and you are over 50 years of age.
Other discounts for vacation property insurance may include:
- installed safety feature discounts (smoke detectors, fire extinguishers or sprinklers, etc.)
- having a good credit score
- and “bundling” your vacation insurance with other policies you may have with the same carrier.
At the end of the day properly insuring your vacation home comes down to working with a knowledgeable agent who can ask you the right questions as they pertain to your situation, and then design a comprehensive policy to make sure you get the right insurance for the right price.
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Either way the choice is yours…