Thoughts of summer vacation combined with the low mortgage interest rate environment may have created the perfect recipe to buy a vacation home. Vacation properties are a big investment and it’s important to protect your purchase.
Insuring a vacation home is different from insuring a primary residence. As a result, you’ll want to purchase insurance that is specifically geared to provide coverage for this type of property. When insuring a vacation home, the type and cost of coverage will vary, depending upon the insurance company and the state in which your vacation home is located.
Most insurers offer at least some type of insurance that is specifically designed for second/vacation homes. Coverage under these types of policies can range from standard coverage that protects against certain named perils, to more comprehensive coverage that protects against all perils unless specifically excluded in a policy.
Keep in mind that, depending on what is covered under the policy, you may need to obtain additional protection (e.g., property or liability coverage) through either an endorsement or separate policy. In addition, if your vacation home is located in an area that is susceptible to flood damage–which is not covered under a standard vacation home policy–you’ll want to look into obtaining separate coverage for that peril as well. Due to some of the unique circumstances surrounding vacation homes (e.g., high-risk location, not being occupied for long periods of time), vacation home insurance premiums are usually much higher than those for a primary residence. However, you may be able to save money by insuring your vacation home with the same company that provides coverage for your primary residence (some insurers may require this).
In addition, you may be eligible for other discounts, such as those offered for newly built homes, non-smokers, and homes that have a security system installed. Policy discounts will vary by state and insurer. Because of the vast array of vacation home insurance products on the market, you’ll want to be sure to shop around for the best coverage and rates. You may also want to contact the state department of insurance where your vacation home is located for additional information on the coverage and rate options that may be available.