Owning a vacation home may be your dream come true, but it comes with added responsibilities and costs as well. The risks associated with a vacation home are different than that of your primary residence and it’s important to discuss those risks with your insurance professional before you purchase. Insurance for your vacation home may need to take into consideration short term renting, temporary vacancy, proximity to the ocean or other bodies of water, and remote areas where fire station response is limited. Unfortunately, these properties attract risks that include natural disasters and dangers posed by vandals and thieves that drive up the cost of insurance. So, what can be done to make sure you’re getting the best coverage at the most competitive rate on your vacation home?
Most people automatically assume they need to buy a separate homeowners insurance policy to cover their vacation home. But some insurers will let you add an endorsement to your primary residence’s policy that will cover the vacation home and this is often the most cost-effective way to go. Although you likely will save money with an endorsement, the coverage level might not be as extensive or appropriate as with a separate vacation home insurance policy. That is particularly true if the home is at greater risk of a natural disaster such as hurricanes, brush fires or flooding. Because the cost and coverage levels of endorsements vary from company to company, it is important to talk to your agent and discuss your options.
Installing a security system is the most important thing you can do to help lower vacation home insurance rates. Insurance companies want your security system to include an updated smoke detector and a carbon monoxide detector. A hard-wired or wireless system attached to a monitoring station will ensure the police or fire department are aware of an emergency and can get to your home in the fastest time possible. This is preferable to a battery-operated system where the damage will be done before emergency responders get to your home because no one was there to make the emergency call. Many insurance companies give discounts for having monitored systems.
Homes that have not been recently updated can pose a problem in terms of getting the most competitive insurance rates and coverages. Make sure your vacation home has a strong roof, up-to-date electrical wiring, plumbing, water heater, and HVAC system, if possible. Old roofs and plumbing leak and damage walls, flooring, and insulation. Old wiring can become faulty and become a fire hazard. Updated systems are safer and much more efficient and will not only save you money in the long run, but will allow your insurance carrier to give you a better rate.
Ask your insurance agent to look for other discount opportunities, just as you would for your primary homeowners insurance. Does your insurance company offer a discount for bundling all of your insurance policies with the same company? Do you get additional discounts for being a loyal customer (staying with the same company for a certain number of years), for not smoking, or even for being a senior citizen? Ask your insurance professional to help you compare quotes from different companies. Even the location of your home (the shore versus the mountains) can have a huge impact on your rate, and different companies may offer significant savings, even if it means breaking your vacation insurance away from your bundle and placing it elsewhere.
People with vacation homes are frequently entertaining and inviting guests to join them. Unfortunately, such activities raise the risk that someone may be injured on the property, leaving you liable for the loss. In addition, vacation homes often are vacant for longer periods of time than primary residences, sometimes months at a time. That also increases your liability risk. If someone breaks in to your vacation home or uses the property without your permission to be there, that limits your personal liability, but you could still be sued if someone is injured. Purchasing an umbrella liability policy can boost the liability coverage on your vacation home and give you peace of mind. These policies typically cost less than a dollar a day, and they can boost your liability protection by $1 million or more.
Purchasing a vacation home may prove to be a great investment and give you years and years of fun and memorable times. Just make sure you’re planning appropriately. Talk to your insurance agent, first, before you buy for help putting together the best vacation insurance package possible to protect your investment and give you peace of mind.