By Arthur Murray

When you inquire about home insurance, one of the first questions an agent will ask is, “Is this for your primary residence?”

It might seem like an odd question, but they ask because policies differ greatly when they’re for second homes — particularly for those in vacation spots. In many cases, you could pay more to insure your second home than your primary residence. There are at least three reasons for this:

  • A second home in a traditional vacation spot — for example, at the beach, in the mountains or near a lake or river — can come with additional risks.
  • By its very nature, a vacation home can stand vacant much of the year, which is a sore spot for insurers.
  • If it’s not vacant, that could mean it doubles as a rental — another potential red flag for providers.

Let’s look at why each point matters to providers, and how you can deal with each issue.

Your second home is in a vacation spot

Obviously, a home on the coast or along a lake or river faces a greater threat from flooding, which is not covered by either standard home insurance or by a second-home policy. You’ll need a separate flood policy for that, and those cost more depending on the flood threat.

Coastal homes, of course, also face a heightened threat of hurricane damage. Standard home insurance (and second-home insurance, for that matter) typically covers wind damage. However, you’ll pay more for coverage depending on the threat of powerful winds at the location.

Home insurance in coastal areas can come with a separate hurricane or wind deductible. Your deductible is the amount you agree to pay out of pocket toward a covered home insurance claim. It’s usually a dollar amount such as $500 or $1,000.

Hurricane deductibles, common for homes along the Atlantic Ocean and Gulf of Mexico, are set as a percentage of the home’s value — usually between 1 percent and 5 percent, though sometimes higher.

For a mountain retreat, you need to consider the possibilities of mudslides or landslides. Neither is covered by standard home insurance or by earthquake insurance. For mudslides, you’ll actually need flood insurance. For landslides, you need separate “Difference in Conditions” coverage; talk to your agent about where to find this.

Your second home is vacant part of the year

This point matters greatly to home insurance providers, because damage to a home can worsen substantially when it’s not immediately detected. The chance of that occurring multiplies when the home isn’t occupied part of the year.

If there’s a break-in, for example, no one may notice for some period, which means there could be more break-ins during that time. If hail knocks a hole in the roof, rain could lead to extensive water damage before you discover it.

Most standard home insurance requires that the home not be unoccupied for more than 30 days at a time.

Some providers will sell you an endorsement for the home insurance policy for your primary home that will handle the second home. You could earn a 10-percent discount by following this path.

Your second home is a rental part of the year

If you rent out your second home, you could need a landlord policy, which could cost 10 to 20 percent more than standard coverage for the second home. Why? Because providers believe you’ll take better care of the home than your tenants will.

The landlord policy will help you if your tenants cause damage at your second home. It will also protect you in case your tenants or their guests are injured at your home.

Tips for second-home coverage

Now that you’ve resigned yourself to the difficulties of insuring second homes, there is some good news. There are ways to reduce how much you pay for coverage.

  • Seek multiple quotes. When dealing with any type of insurance, always seek quotes from multiple providers. They evaluate risk differently, which means premium amounts can vary greatly.
  • Ask about discounts. As mentioned above, many providers will give you a discount on second-home coverage if you insure your primary residence with them. You could also win discounts by installing a security system or taking other measures to make the second home safer. Be sure to ask your agent about potential discounts.
  • Pay in full. If you pay the full premium upfront rather than in installments, you usually can spend less for coverage.
  • Raise your deductible. Your deductible has an inverse relationship with your premium. The higher the deductible, the lower the premium. Just make sure you can come up with the deductible when necessary.

Finally, remember that while owning a vacation home comes with costs, you’ve also got the benefit of being able to get away whenever you want. Enjoy your good fortune!


Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

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