Thinking about getting a second home? Maybe you are in the market for a vacation home? Or one to use as a rental?
There are of course a number of factors to consider – location, condition, furnishing, upkeep. One thing that many people overlook until it is too late – insurance. Let’s look at a couple of the most popular questions we get regarding second home insurance.
1. Outbuilding Coverage
If your second home is a vacation house, it may well have what is referred to as outbuildings – boat houses, sheds, athletic spaces, and so forth. It’s very important then that you consider insurance for the entire property, not just the main dwelling.
Many insurance companies will provide coverage for outbuildings at a percentage of the coverage of the main house. So if your home is insured for $250,000, an insurer may provide you with a policy of coverage of $25,000 (or 10%) for the outbuildings.
Note that while 10% is a common number, it is not the only option for outbuilding coverage that may be provided by your insurance agent.
2. What are the Local Requirements
Unless you’ve had to deal with it before, you may not be aware that insurance policies can differ from state to state. (And even in some cases, within areas of a state.)
This is important to consider, particularly for those purchasing second home insurance on a property outside of their home state. In these instances, it might be best to connect with a locally-based insurance broker who can help you to better understand the local requirements.
3. Can’t My Primary Policy Act as My Second Home Insurance
The short answer is no. Even if you are “living” at your second home for an extended period of time, your primary policy explicitly covers your primary residence.
Or we should say, that structure. That’s because some primary policies do offer coverage for personal property. With this, if something were to happen to your second home, the structure would most likely not be covered while the items inside would be, under your primary policy.
That leaves a rather big hole in your safety net. If you’re willing to take that chance, you might consider a limited policy, such as fire protection, that can help provide an additional level of coverage on your second home.
4. Rental Requirements
If you are purchasing a second home exclusively to use as a rental property or you are purchasing a vacation home that you will rent out when you’re not there, you might need to look at rental specific insurance.
While some second home insurance policies will provide you with a strong base of coverage in these situations, rental policies are specifically designed for your protection with renters.
The information presented here is intended to paint a broad picture around the importance of a second home insurance policy. While this may help guide your general decisions, every property that you purchase will come with its own specific insurance needs.
If you have questions regarding your home or policy options, we would be happy to discuss them to make sure you have the right policy in place.