Home insurance for vacation homes

Homeowners insurance policies cover the physical structure of your home as well as your personal belongings inside. Most home insurance policies, however, only cover your primary residence. If you own a vacation home where you spend a few weeks or months of the year, you will almost certainly need secondary homeowners insurance.

Defining vacation home insurance

Vacation home insurance is another name for secondary home insurance, a type of policy that provides coverage for second homes such as a mountain cabin or a beachside bungalow. Vacation home insurance is similar to standard homeowners insurance, but there are some significant differences. Vacation home insurance is, first and foremost, a separate policy from your primary homeowners policy.

What does vacation home insurance cost?

The price of homeowners insurance, including vacation home insurance, is determined by a number of factors. When you apply for a policy, the insurance company will most likely calculate your premium based on the state where the home is located, the condition of the home, the type of home, and your claims history. Most states will also use your credit score and ZIP code to determine how much you pay, though some states prohibit the use of these rating factors. The amount of coverage you choose and your deductible, just like with regular home insurance, will influence the cost.

Vacation home insurance premiums by state

Seasonal home insurance rates differ greatly by state. The average annual premium for vacation home insurance in the United States is $2,014, but your premium may be higher or lower depending on where your home is located and other rating factors. The following table shows the average annual cost of secondary homeowners insurance in each of the 50 states:

What does secondary home insurance cover?

In terms of coverage, secondary home insurance and traditional home insurance have some overlap. However, keep in mind that these are two distinct policies. When you buy a vacation home, you will almost certainly need a separate policy to cover it. Some companies may allow you to add vacation home coverage to your primary homeowners policy, but this is uncommon. Here's a rundown of what seasonal home insurance covers:

• Dwelling coverage: Vacation home insurance protects your home's physical structure from damage. If you have a named perils policy, your home will be protected against the specific types of damage listed in the policy. Open perils policies protect your vacation home against any peril that isn't specifically excluded.
• Other structures coverage: If your detached garage, fence, shed, or other detached structure is damaged in a covered event, Other structures coverage will reimburse you for repairs.
• Personal property coverage: Personal property coverage pays to replace your personal belongings, such as clothing, furniture, and appliances, if they are damaged or destroyed by a covered peril.
• Loss of use coverage: Loss of use coverage, also known as additional living expenses coverage, pays for hotel bills, parking fees, restaurant meals, laundry, and other expenses if your vacation home is damaged in a covered event and you are forced to relocate temporarily.
• Personal liability coverage: Personal liability coverage pays if someone is injured at your home and you are found to be at fault, or if you cause damage to someone else's property. Legal fees are also covered under liability coverage if the victim sues you.
• Medical payments coverage: Medical payments coverage will cover the cost of a guest's medical bills if they are injured on your property, even if you are not at fault.

Other coverage types to consider

You may believe that vacation home insurance will cover any disaster that may occur, but in reality, second home insurance does not cover everything. Indeed, certain losses, such as floods and earthquakes, are expressly excluded from the majority of secondary home insurance policies. As a result, you may want to think about purchasing additional coverage.

For example, if you own a vacation home near the beach or on a lake, it may be vulnerable to flood damage. If a flood causes extensive damage to your home or property, purchasing a separate flood insurance policy could protect your finances. If you live in an earthquake-prone area, getting earthquake insurance may be beneficial.

If it's available and your house qualifies, you should also inquire about replacement cost coverage for your house and personal belongings. With replacement cost, you would receive the full cost of replacing your destroyed possessions or home, rather than an amount deducted for depreciation.

Ways to save on vacation home insurance

Seasonal home insurance can be expensive depending on where you live and the type of home you own, among other factors. There are, however, ways to save money on your insurance policy. Here are some ideas for finding low-cost homeowners insurance:

• Obtain multiple quotes: Before deciding on an insurance provider, you may want to shop around and obtain homeowners insurance quotes from various carriers. That way, you'll be able to see which provider has the best deal for the amount of coverage you require.
• Pay in full: Many insurance companies will give you a discount if you pay your annual premium in one lump sum rather than 12 monthly instalments. However, if you pay your vacation property insurance through your mortgage escrow account, this discount is unlikely to apply.
• Look for discounts: Most property insurance companies provide discounts that can help you save money on your policy. When shopping around, look for providers who offer a variety of discounts, such as being claims-free, purchasing a policy online, or enrolling in automatic payments.
• Install a security system: Homes with security systems may be less expensive to insure, especially vacation homes, which are frequently targeted by thieves.

Renting out your vacation home

Many people choose to rent out their vacation home in order to supplement their income while remaining in their primary residence. However, keep in mind that renting out your home on a platform like Airbnb will almost certainly necessitate additional insurance.

The best thing to do in this situation is to contact your insurance company. Depending on how long the property is rented for, you may need to purchase a short-term or long-term rental insurance policy. If you only rent the house for a few weeks each year, you may be able to add an endorsement to your policy that covers it as a vacation rental. If you rent a location for an extended period of time or year-round, you'll almost certainly need a separate rental property insurance policy.

One thing to keep in mind is that, even if you have short- or long-term rental insurance, it will only cover the physical structure of the home, equipment used to operate the home (such as a washing machine), and your liabilities as the owner. It does not cover the personal belongings of guests. Renters must rely on their own renters or homeowners insurance policy to protect their personal belongings while staying at your vacation home.

Frequently asked questions

What is the best second home insurance provider?

Everyone has a different idea of who the best second home insurance provider is. Where you live, the type of home you own, the amount of coverage you require, and your budget will all have an impact on which carrier is best for you. Obtaining quotes from multiple providers may assist you in making your decision.

How much home insurance do I need?

You may be wondering how much coverage you need, especially if you are a first-time home insurance buyer. The amount of home insurance you purchase is determined by your circumstances, but insurance experts recommend that you purchase enough dwelling insurance to cover the cost of rebuilding your home to its original condition if it is destroyed. You should also get enough personal property insurance to cover the full value of your and your family's possessions. Finally, choose your liability coverage limit based on the value of your personal financial assets that could be at risk in the event of a lawsuit.

Does a lake home policy cover my boat?

It could happen. You may have a boat, jet ski, canoes, kayaks, or other water toys if you own a lake house. On your vacation property, you might even have a dock or a boat lift. The best course of action is to speak with your insurance agent about these features. You may be able to add coverage for your boats, personal watercraft, dock, or boat lift to your existing policy, or you may need to purchase a separate policy for certain items.

Methodology

StrongInsurance analyzes 2021 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. using Quadrant Information Services. Rates are based on 40-year-old male and female homeowners with no claims, good credit, and the following coverage limits:

• Coverage A, Dwelling: $250,000
• Coverage B, Other Structures: $25,000
• Coverage C, Personal Property: $125,000
• Coverage D, Loss of Use: $50,000
• Coverage E, Liability: $300,000
• Coverage F, Medical Payments: $1,000

In addition, the homeowners have a $1,000 deductible as well as a separate wind and hail deductible (if required). Rates for vacation homes were calculated using secondary occupancy.

These are sample rates and should only be used for comparison. Your quotes will be unique.