How to Insure Your Vacation Home
Do you need a new insurance policy for a second home? Probably. While your first home’s policy might extend liability coverage to a second home, it won’t insure the structure itself or your belongings. For that, you’ll need to purchase a second homeowners insurance policy (and potentially a second home warranty). Expect today’s pricing to reflect recent market shifts: consumer analyses found homeowners premiums jumped about 20% during 2023 with additional increases into 2024, putting the estimated 2024 national average around $2,522 (Insurify 2024 Home Insurance Report). The drivers are well‑documented—elevated catastrophe losses (NOAA), higher repair/rebuild costs and claim severities (LexisNexis 2024 U.S. Home Trends Report), and reinsurance hardening that only stabilized somewhat at the Jan 1, 2025 renewals (Gallagher Re 1/1/2025). Secondary/seasonal occupancy usually rates higher than an otherwise similar primary home, many coastal policies carry separate wind/hurricane percentage deductibles (commonly 2%–5%), and NFIP flood policies for non‑primary residences include a mandatory $250 surcharge (Insurance Information Institute; FEMA NFIP Manual).
Why? For insurers, a second home presents additional loss potential. Unoccupied stretches can worsen water damage and invite theft/vandalism; guest or renter occupancy adds liability exposure. Those risks are compounded by today’s hazard trends: the U.S. has averaged more than 20 billion‑dollar weather and climate disasters per year in recent five‑year periods, with severe convective storms and hurricanes among the leading insured‑loss drivers (NOAA; Aon 2025 report). With underwriting tighter in wildfire and hurricane markets and reinsurance still expensive relative to pre‑2023 levels (Gallagher Re), making informed choices can materially affect your cost and insurability. If you’re considering a second home, here are five research‑based steps to manage risk and premiums.
1. Pick the right location
Location drives price and availability. The frequency and cost of billion‑dollar disasters have trended higher, with the recent five‑year average exceeding 20 events annually (NOAA). Severe convective storms (hail, straight‑line wind, tornadoes) have been the top insured‑loss driver in the U.S., while floods, hurricanes, and wildfires remain high‑impact perils (Aon; Munich Re). Before buying, check for peril‑specific terms common in cat‑exposed areas: separate wind/hail or hurricane percentage deductibles often set at 2%–5% of the dwelling limit (III); flood insurance requirements, where NFIP pricing under Risk Rating 2.0 transitions toward property‑specific risk with statutory annual increase caps (generally up to 18%) and a $250 non‑primary residence surcharge (FEMA Risk Rating 2.0; FEMA NFIP Manual). In wildfire‑exposed Western WUI areas, many buyers rely on a state FAIR Plan for basic fire coverage paired with a private “wrap” policy to fill gaps; capacity constraints can also push properties into specialty (E&S) markets at higher cost (Gallagher Re 2025 renewals; NOAA).
2. Bundle it with your other insurance policies
Bundling your vacation home with your regular home and auto insurance policies at the same company can save you up to 30%. Real‑world 2025 figures vary by insurer and state: Progressive notes an average ~5% bundle savings (Progressive), Allstate and Nationwide advertise “up to” 25% and 20%, respectively (Allstate; Nationwide), American Family cites up to 23% on auto and up to 29% on home (American Family), and Travelers highlights up to ~13% on the home policy (Travelers). Availability and discount size can be constrained in catastrophe‑stressed markets, and base‑rate changes may offset some savings—consumers continue to re‑shop even when bundled (J.D. Power 2025 Shopping Study).
3. Choose the right building materials
Insurers increasingly credit verifiable resilience features. In wind regions, an IBHS FORTIFIED Roof (sealed roof deck, enhanced edges, ring‑shank nails, verified by a certificate) can improve both loss performance and insurability; Florida and other states require wind‑mitigation credits for features like opening protection and roof‑to‑wall connections (Florida Statutes §627.0629). In hail belts, UL 2218 Class 4 impact‑resistant roofing and IBHS hail‑rated shingles are often recognized by insurers for credits (IBHS Hail Impact Ratings; Oklahoma Insurance Department). In wildfire/WUI areas, California requires filed discounts for specific home‑hardening measures (Class A roof, ember‑resistant vents, enclosed eaves, noncombustible 0–5 ft zone, ignition‑resistant materials) and community mitigation (California “Safer from Wildfires”; IBHS Wildfire Prepared Home). Document materials and obtain certifications where available to capture credits.
4. Install fire and security systems
One of the eight most common ways to lower your home insurance premium is to install fire alarms, fire extinguishers, smoke detectors, and sprinkler systems, as well as burglar alarms, deadbolt locks, and other home security devices. Typical 2025 credits are about 2%–5% for basic devices, 5%–15% for centrally monitored alarms (proof of monitoring is often required), and 10%–20% for automatic fire sprinklers (III; State Farm). Effectiveness data back these incentives: working smoke alarms cut the risk of dying in a reported home fire by roughly half, and home sprinklers reduce the death risk by around 80% (NFPA – Smoke alarms; NFPA – Home fire sprinklers).
5. Compare quotes
Most people don’t compare quotes from multiple insurance companies, even though it’s important to do so — different providers have different policies and procedures, so shop around to find the best deal. In higher‑risk ZIP codes, expect wider price dispersion, separate wind/hail or hurricane deductibles (often 2%–5% of Coverage A), and the possibility of placement in specialty (E&S) markets or residual programs like FAIR Plans and state wind pools; in wildfire‑heavy states, many owners pair a FAIR Plan with a private difference‑in‑conditions “wrap” policy to fill coverage gaps (III). Elevated catastrophe activity documented by NOAA and still‑elevated reinsurance costs in 2025 (Gallagher Re) mean early shopping and apples‑to‑apples comparisons (limits, deductibles, endorsements) are key. If you’re looking for a place to get started, check out our expert-informed review of the eight best home insurance companies.
Planning on Renting out Your Vacation Home?
Renting out your second home will increase the cost of your premium. After all, one of the things homeowners insurance covers is your liability for anyone who’s injured on (or by) your property. If a tree falls on your second home when it’s empty, that’s an expensive claim. But if a tree falls on your second home and injures a renter, that’s a really expensive claim. If you’re considering renting, make sure to factor in the correct policy form: standard homeowners policies often exclude business/home‑sharing activity, so owners typically need a landlord “dwelling fire” policy (e.g., DP‑3) for long‑term leases or a dedicated short‑term rental endorsement/policy for nightly/weekly stays (Insurance Information Institute; NAIC). Industry guidance indicates landlord policies often run roughly 20%–25% higher than comparable homeowners coverage, reflecting tenant and vacancy risks (III). Look for loss of rents/fair rental value coverage, confirm guest‑caused damage terms, and carry strong liability limits—many jurisdictions or contracts target at least $1,000,000 for STRs (e.g., San Diego’s STRO requires $1M or equivalent platform coverage) (City of San Diego STRO). Platform protections are limited: Airbnb’s AirCover applies only to Airbnb‑booked stays (up to $3M damage protection and $1M host liability, with exclusions), and Vrbo’s program offers up to $1M liability only—neither replaces your own property policy (Airbnb AirCover; Vrbo). Flood and earthquake remain separate purchases; in flood zones, remember NFIP’s $250 non‑primary surcharge and consider private flood alternatives where available (FEMA NFIP Manual; FEMA Risk Rating 2.0).
What’s Next?
- Before buying a second home, see our homeowners insurance buyer’s guide for tips on choosing the right provider and asking the right questions—especially around occupancy classification, separate wind/hail or hurricane deductibles, and whether residual markets (FAIR Plans/state wind pools) or E&S placement might be needed in your ZIP code (NOAA; Gallagher Re).
- You can only control a few of them, but it’s important to be aware of the factors that determine how much your home insurance will cost. Since 2020, insurers have faced elevated catastrophe losses and higher rebuild costs, contributing to premium increases (e.g., about a 20% jump during 2023 and further increases into 2024); many policies in coastal/hail regions now feature 2%–5% wind/hurricane deductibles, and NFIP flood policies for non‑primary residences add a $250 surcharge with Risk Rating 2.0 phasing in more risk‑based pricing under annual increase caps (Insurify 2024; III; FEMA Risk Rating 2.0; FEMA NFIP Manual).
- Since an insurance policy only covers the structure of your home (not your belongings within), a vacation home is also a prime candidate for a home warranty. Check out our review of the best home warranty companies to get started. Typical costs in 2025 run about $360–$900 per year with $75–$125 per service call, and terms vary for second homes and rentals—always read the full contract and confirm eligibility for vacation or rental use (Forbes Advisor; FTC; AHS landlord coverage; Cinch T&Cs).
