So, it turns out that working from home in 2020 made many people want…a second home. In fact, by October 2020, demand for second homes skyrocketed 100% from a year earlier, according to a report in “The World Property Journal.” It makes sense that if you could work from anywhere, you might prefer to work somewhere fun, fabulous, beautiful, or simply far-flung.
While a vacation home can offer an awesome escape from the everyday, it won’t allow you to escape the need for homeowner’s insurance. Vacation home insurance is a type of insurance policy that covers a home you own but don’t live in full time. Because a vacation property is a second home, and the risk factors are different, you will need a second homeowner’s policy to cover your home.
There are multiple factors that will influence your premium, as well as other policies you may want to take out depending on how you use your vacation home, and what external risks are posed to your property.
Here we discuss a few things that impact the coverages and costs of vacation home insurance:
Property Type
Yes. The type of property your vacation home is, matters. Insurers view single-occupancy homes, condominiums, and townhouses differently.
Condominiums may have lower insurance costs than stand-alone homes. Why? Because a homeowners association maintains the property and may provide some security. The association also insures the exterior of the property, which is usually included in your monthly maintenance fees.
Your personal condo insurance will cover the specific areas of the unit listed in your policy, as well as your belongings. Whereas with a stand-alone home, you’ll be required to insure the entire property, interior and exterior, as well as your belongings. That’s why the type of property you own matters for insurance costs.
Location
Your property’s location is always a factor in determining insurance costs. The very location that makes a place desirable may also make it more expensive to insure. Location based risks will impact the price of coverage and may even incur higher deductibles.
For example, a ski or hunting lodge in a remote mountainous area could be at greater risk for damage from wildfires. A beach house may be exposed to wind damage or storm surge from hurricanes.
Because of these risks, you may be required to take out secondary coverage. If the property is at risk of flooding, you should have a separate flood insurance policy. If the property is in an earthquake risk area, you should have a separate earthquake insurance policy.
Condition and Age of Property
Yes. Insurers will look closely at the age and overall condition of the home when determining premiums. Older homes that have been neglected in terms of maintenance and/or upkeep will typically cost more to insure than a newer home or one that’s been well maintained.
If you’re building your vacation home, choose the materials wisely. The type of building materials used in a vacation home will impact the cost of insurance.
Amenities
Some of the amenities that can add relaxation to your home are also viewed as added risks. Things such as pools and hot tubs are viewed as risks. If your vacation residence is equipped with these or other special amenities, you may be charged a higher insurance premium.
Renting
Many second home owners view their home as a potential moneymaker. If you can rent it out while you’re not using it, you can bring in extra cash. Doing so however, could require you to purchase additional home insurance coverage for liability, bodily injury, and medical payments.
Short-term or long-term rental insurance policies depend on how long the home will be used for rentals. If you’re renting for multiple weeks throughout the year, you may be required to take out a landlord or rental dwelling policy. However, if you’ll only be renting for a few short weekends throughout the year, you most likely don’t even have to notify your insurer.
Rental coverage protects you as the homeowner. It does not cover your renter’s personal belongings. If you’re renting, you may want to suggest your renters purchase their own renter’s insurance policy to protect themselves against losses.
Make Sure You Have the Right Insurance for Your Vacation Home
When it comes to insuring your second home, the best thing you can do is work with an insurance professional. They’ll be able to work with you to provide the best insurance options. Some insurers also offer bundles which can help you save money on your premiums.
If you are looking to insure your vacation home, reach out to PFGI’s insurance experts for help by calling 610-422-3530.
