5 Tips for Insuring Your Vacation Home

Adam Morgan
Adam Morgan

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). Here’s the rub — that second policy will probably be more expensive and less comprehensive. Some providers add an automatic surcharge to vacation homes ranging from 10% to 20%, and they may not cover specific environmental perils they deem too risky for your second home’s location.

Why? For insurance providers, a second home is always a riskier proposition than the home you live in full-time. First, if no one lives in your vacation home most of the time, it’s more likely to be burglarized, vandalized, or unattended when something breaks. Second, if it’s occupied by friends or renters when you aren’t there, your liability increases in the eyes of an insurance provider (the more people on your property, the more likely someone will hold you accountable for an injury). Either way, a vacation home is a big decision that requires some careful choices. If you’re considering a second home, here are five tips to lower your insurance premium and avoid claims.

1. Pick the right location

When an insurance company determines your premium, it looks at how often homes in the surrounding area submit claims. If extreme weather events or local topography puts you in a claims hot spot, the cost of your premium will rise, even if you’ve never made a claim yourself. Before purchasing a potential vacation home, check to see if it is located in an area prone to floods, earthquakes, hurricanes, wildfires, and other natural disasters.

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%. It could even make insurance providers less likely to drop you for “excessive” home claims or driving violations. (However, bundling won’t protect you completely from those claims, so don’t rely on it.)

3. Choose the right building materials

There’s a reason home insurance companies ask dozens of questions about the makeup of your home before giving you a quote: Cheaply built houses are more likely to result in claims. Providers will ask about the materials used for your walls and roof, the age of your electrical wiring, and much more. Make sure you ask just as many questions before buying a second home, and know that the older and cheaper things are, they more they’ll cost to insure.

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. These same precautions on your vacation home can save you 15% to 20% on insurance.

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. 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 extra cost of a “landlord” or “rental dwelling” policy, which usually runs around 25% higher than a regular home insurance rate.

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About the Authors

Adam Morgan

Adam Morgan Contributor

Adam Morgan is a former senior editor for Reviews.com. He's written about banking, credit cards, home warranties, insurance, and many other subjects (like running shoes) to give our readers the best information to assist in their buying decisions. His writing has been featured in The Los Angeles Times, Chicago Tribune, The AV Club, The Guardian, Chicago magazine, Minneapolis Star-Tribune, and elsewhere.