How to Insure a Vacation Home
(Enjoy your relaxing getaway and long-term investment with vacation home insurance)
Do you have a cabin in the woods, a house by a lake, or a cottage near the beach? If so, you know the pleasure and relaxation that it can bring to you and your family’s life. Or maybe you’ve taken the entrepreneurial path and rented out your vacation home to make some money on the side.
For these reasons and more, you know that it is a special place you want to protect for years to come. That’s why you need vacation home insurance.
Independent insurance agents can advise you about the best coverage options and vacation home insurance rates. And while you can rely on the expertise of our independent insurance agents, it is always a wise decision to be informed.
Therefore, let’s look at the many aspects of how to insure a vacation home so you can get the right coverage and peace of mind.
What is Vacation Home Insurance?
A vacation home insurance policy is designed to provide coverage for your secondary property. It’s also known as seasonal home insurance and secondary home insurance, depending on your intended usage of the property.
Vacation home insurance covers property damage, liability claims, burglary, recreational vehicles and more depending on the conditions of your policy.
Risk Factors for Your Vacation Home
As with any property, it’s important to consider the risks and insurance costs that come with them. Some of these risks include:
- Property Type: Just like there are different vacations, there are certainly different vacation homes. From a one-room cabin in the mountains to a multi-level complex near the beach, the type of vacation home plays a significant factor in what risks may be present. Even vacant land with minimalist structures can be problematic!
- Amenities: What may add value to your vacation home may also make it more dangerous. A hot tub can open your vacation home to a liability lawsuit should a guest slip and fall. Recreational vehicles, such as ATVs and row boats, are also problematic — even if guests don’t have permission to use them.
- Location: Your property may be located in a remote area without easy access to emergency services, or it may be in a highly populated area, making it susceptible to crime.
- Rentals: Renting your property opens your property up to the aforementioned risk to your vacation home’s guests. Landlords need to have vacation rental home insurance, which is specifically designed to minimize risks just like any other rental home.
The best vacation home insurance policies work to provide comprehensive coverage that addresses all of these risks.
How Much Does Vacation Home Insurance Cost?
Let’s be upfront: The quotes for a vacation home are typically higher than if the same home were your primary residence. The reasons for high premiums include:
- The property is typically left vacant
- Susceptibility to natural disasters (i.e., earthquakes, flooding, erosion, wildfires)
- Access to emergency services (i.e., a house fire)
- Rate of crime in the area
- The home is used as a rental property (including VRBO, Airbnb, etc.)
Each of these factors plays a role in the greater likelihood of filing an insurance claim, hence the costs.
Insuring a vacation home is relatively simple: homeowners can purchase an independent home insurance policy for the seasonal/secondary residence.
Some companies, such as Farmers Insurance, don’t require you to have a homeowner’s policy to insure your seasonal or vacation home. Either way, premiums are based on the same factors as any other residence. These include:
- Replacement cost value of the property
- Other applicable risks (see above)
Of course, nearly every vacation home insurance company applies different surcharges and prices their premiums at different amounts.
To give you an idea of how much it varies, Nationwide currently applies a 20% increase to policies covering secondary vacation homes, and State Farm only charges 10% for the same coverage. To make things even more complicated, you may be able to lower the cost if:
- The company also insures your primary residence
- A full-time housekeeper lives in the vacation home
- A caretaker lives on the grounds of the property
- A maintenance company regularly checks on the property
To know your options, speak with an independent insurance agent now to find out which specific factors affect your unique vacation home.
Do I Need Insurance on My Vacation Home?
There are a lot of what-ifs whenever it comes to determining the type of insurance policy a vacation home needs. Imagine some of the following:
- A nearby river overflows and causes mold damage in your cabin.
- Comprehensive property coverage can help with the cleanup and restoration of the cabin.
- A guest slips on a boat ramp and injures their knee.
- Having liability coverage can help with the injured’s medical bills and possible time off work.
- A burglar steals your wife’s purse which included her new smartphone and jewelry.
- Replacement cost for stolen personal property with a secondary vacation home insurance policy can reimburse you in full (depending on your provider) or your homeowners insurance can replace those items at a percentage of the cost (typically 10%).
If any of these situations seem like they could happen to you, then speaking with our independent insurance agents can get you the coverage you need for peace of mind.
Tips to Lower Your Vacation Home Insurance Premium
Here are some great ways to lower your vacation home insurance premiums:
- Installing a central alarm system to detect carbon monoxide, fires, break-ins, water damage, and more.
- Installing security measures like deadbolt locks, security cameras, etc.
- Removing all non-essential structures and equipment from the property such as lawnmowers, ATVs, etc.
- Multi-line/bundling discounts can reduce your premiums. Ask our independent insurance agents which companies offer discounts for other insurance types, such as automotive policies or whether your homeowners insurance company is right for you.
Bear in mind that the cost of vacation home improvements makes your insurance rates less expensive, so that the cost generally outweighs what you’d save on your premium.
As an example, many policyholders are eligible for a discount for vacation homes by having a central alarm system installed, but the savings on your premium will be less than the monthly subscription fee for approved security systems.
That being said, even a slight reduction in premiums while keeping your home protected has value in and of itself. Keeping a home safe is a smart defense against the threat of crime and damage, reducing the likelihood of the policyholder needing to filing a claim.
Other Insurance Coverages You Might Need to Purchase
Insurance for Natural Disasters
Depending on where your vacation home is located, you may be putting your vacation home in serious risk without adequate coverage. While you may have basic coverage for your vacation home, it’s important to consider whether you’ll need additional earthquake and flood insurance.
The reason for this is that earthquake and flood damage are typically not covered by standard home insurance policies, leaving you susceptible to the whims of Mother Nature. Our independent insurance agents can advise you on finding the best flood insurance rates for vacation homes.
As an example, suppose that you have a log cabin in Southern California. If an earthquake strikes, your vacation home may suffer damages that you may not even be aware of until next vacation! Or that relaxing beach house you have on the coast of Florida may be in the path of a devastating hurricane.
Vacation Home Rental Insurance
Want to rent out your vacation home for offsetting the cost of owning it or for making another revenue stream on the side? What about using Airbnb, VRBO, or privately renting out that great place you have in the woods?
For vacation homeowners who want to rent out their property, finding rental home insurance is a good option. Of course, you’ll want to understand all the ramifications of doing so and make sure your vacation home is properly insured.
Depending on how often you rent it out and the length of stays, you might need to notify your insurer or purchase a separate landlord insurance policy altogether.
And if you’re visiting a rental property for a vacation, you should know that most policies provide homeowners insurance for vacation rental homes. Typically, this reimburses you for 10% of stolen or damaged items when you file a claim.
Need help determining how much coverage you should have? The expert guidance from an independent insurance agent can help you make the most informed and comprehensive choice for your individual needs.
Common Questions about Vacation Home Insurance
Question #1: Can I use home insurance money for vacation?
While it may seem like that you can spend a claim whichever way you’d like, it’s important to understand that claims are meant to preserve the property and restore it to pre-loss condition. Some companies will allow you to do repairs yourself, while other insurers may only pay a claim if professional work is hired.
There are some instances where you can do the DIY route and pocket the difference, but be sure to check your policy details. Certain insurers only pay out the cost of repairs and demand reimbursement for anything over that, so you might not be able to go on that cruise after all …
Question #2: Do I need accident insurance for a vacation home?
In nearly every case, having accident insurance is a smart decision. However, it isn’t mandatory unless you’re required by a HOA/condo association. Also, mortgage lenders may only approve your loans and refinancing options if you have insurance, so keep that in mind as well.
Question #3: Does home insurance cover vacation cash stolen?
A homeowners policy can reimburse you for cash stolen on your vacation within certain predefined dollar limits. Typically, this limit is around $200. This means that if your wallet is stolen with $600 of cash inside, you would be reimbursed for only $200.
Often, there is a catch: Depending on the cost of your deductible, you might not be able to file a claim if you don’t meet a threshold. If your deductible costs $200, it would defeat the purpose altogether (like paying $600 to get back $200 in cash).