Multiple home insurance
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Purchasing a homeowners insurance policy is probably the most proactive way you can protect your investment in your home. That’s true whether you’re insuring one property, or if you are lucky enough to have multiple properties — whether that includes a vacation home, a condo in the city or a cute little beach bungalow that you’ve listed on Airbnb.
There’s a learning curve if you have multiple homes because the policy for your primary home will not be exactly the same as the policy for your additional housing. The risks associated with a second home are different. You’ll need to take different steps to make sure you’re adequately covered.
How do you insure a vacation or second home?
It can be more difficult to get second home insurance than it was with your first home. This is for a variety of reasons, including the fact that because your second home may be vacant at times, it will present a more appealing aspect to burglars and vandals.
Your first step in finding vacation home insurance is to check with your current provider. If you are insured with a larger and more established company, it may offer multiple home insurance policies. In fact, you may be eligible for a discount if you have more than one policy with the same company, or they may have the option to bundle your policies under one deductible.
You may also have difficulty getting coverage if your home is in a high-risk area that is prone to hurricanes or other severe weather or natural disasters or is close to a beach where there may be risk of flooding. Another reason might be if the home is older and thus has older electrical and plumbing systems, which set off a red flag for insurers because of the higher chance of flooding or fire.
If you cannot find coverage on the insurance market, look at your state’s FAIR plan. The Fair Access to Insurance Requirements (FAIR) plans first came into being in the 1960s to provide insurance for people in high-risk areas. These plans are generally pricier than what you’d find from a regular insurer, but they give you vital coverage you’ll need for your second home. Not every state has a FAIR plan, but a quick Google search will let you know if your state has one.
What should you consider when getting second home insurance?
To begin with, the policy for your second home will take into account all the same factors as the insurance for your primary home: things like the age of the home, what it’s made of and where it is, as well as your personal information about credit worthiness, marriage status, claims history and age.
An additional consideration with a second or even third home, however, is how much time it will spend unoccupied. An empty house or condo is a prime target for those who would damage or steal from it. In addition, if there’s no one living in a home, events such as a sump pump overflow or fire could occur without anyone realizing it.
Thirdly, it’s often true that vacation homes are in areas where there is severe weather. Consider the “snow bird” — a designation for those who migrate south in the winter to second homes in Florida or other southern locations. Beach homes and those in tropical locations are more prone to violent wind storms, hurricanes and flooding, which is generally not covered in a basic homeowner insurance policy.
Flood insurance is only available in the U.S. from the National Flood Insurance Program, although you may be able to get it through your insurer, which will administer the program on the government’s behalf. Flood insurance is especially important if you live in a flood plain or flood zone. FEMA’s Flood Map Service Center lets you type in your address to find out if your second home is in a danger area
How much is it to insure a second home?
As we mentioned above, insurers see second and vacation homes as higher risks because they are more likely to be burglarized or vandalized and because they are often in areas that have higher risks, such as flooding, to consider.
Another reason why vacation homes may be considered high risk is the amenities that their owners install, such as pools, hot tubs and saunas. All of these pose a risk of drowning or injury, especially if they are used without a responsible person overseeing the activities. If you have a vacation home and the neighbor’s eight-year-old son sneaks over to use your pool when you’re not around, you would be liable if anything happened to the child.
Because each home and each insurance policy is unique, it’s difficult to say what the average cost of vacation home insurance would be. Some sources suggest you will pay 10-20 percent more than if it was your primary home, but your best bet here is a knowledgeable agent or insurance representative who can talk to you about costs.
How to save money on second home insurance
Despite the higher insurance costs, there are ways you can save money with your second home insurance policy. Consider the following when you are looking to purchase a second home:
- Location: If possible, avoid areas that are known for flooding, hurricanes or earthquakes. Unfortunately, the things that make a vacation home seem like a good idea are often the reasons for the increased costs of insurance. Only you can decide what is the best balance between increased insurance costs and the benefits of enjoying your property
- Type of property: That cute shack on the beach may be adorable, but if the wiring is 60 years old and the plumbing is coming apart, is it your best option? It also matters whether you are looking at a stand-alone home, a condo or a townhouse. The latter, which often come with an HOA to monitor the property, will probably be a cheaper insurance risk.
- Amenities such as a pool or hot tub: These will raise your insurance costs, and you may want to consider additional liability protection if you have them. Again, only you can decide if the trade-off is worth it.
Once you have found your second home, you can possibly save money with the following:
- Install a security system or burglar alarm with a camera that links you to the local police department.
- Bundle your multiple home insurance policy with your primary residence policy.
- Buy a home with an HOA community—an observant HOA can be your best bet against unauthorized use of your home when it’s vacant.
- Shop around for multiple quotes from insurers when shopping for homeowner insurance. Although it’s a good idea to start with the insurer who handles your primary home, you may get a better deal for your secondary home elsewhere.
Don’t forget to ask what other discounts might also be available to help you save money.
What is considered a vacant home?
Your insurer will want to know how often someone is living in your second home. Unoccupied and vacant home insurance is available for you if a property is uninhabited for 30 days or more. Your home is considered unoccupied if it is in livable condition — in other words, it is furnished and ready for you to show up with your suitcase. A home is considered vacant, meanwhile, if there is no furniture or personal property in it.
Generally, insurers look at vacant homes as the higher risk because it’s less likely that someone will check on the home if there’s nothing in it, and therefore things like sump pump overflow or an electrical fire are unlikely to be noticed right away. If your second home is unoccupied or vacant, especially if it’s a summer home that you are only living in a few months of the year, you’ll want to investigate insurance specifically targeted for homes that are empty.
Can one home insurance policy cover more than one home?
Unfortunately, the answer is no. Because each home is unique, you’ll need a policy that is crafted for each specific building. Each home has variables that influence the level of risk involved, so each of your homes will need its own policy.
You may, however, be able to bundle both policies together if you use the same insurance company for both. This may net you a discount on both premiums, or you may be able to use a single deductible for both properties. We suggest you start your search for second home insurance by talking to an agent for the company that handles your primary home.
What if one is renting out their second home?
If you’ve got someone staying in your second home briefly — say, a college student on spring break — there’s nothing extra you need to do to make sure you’re covered. Most insurers accept brief visits to your home. If the stay is for longer than a week, though, you’d be wise to call your company to ensure that you won’t need a short-term endorsement to cover the visit.
However, if your second home is regularly rented out or used as an Airbnb or with a similar company, you’ll need to take another look at your insurance. If your second home is rented out by the month or year, you’ll need landlord or rental dwelling insurance. Landlord policies do cost more — generally about 25 percent more than a regular policy — but they give you increased liability and property coverage that you should have as a landlord.
If you are using your second home for short-term rentals, you’ll also need additional coverage. Although companies like Airbnb offer their own insurance policies to homeowners, these policies are usually just for liability and do not cover damage to the property itself. If you are making money on the rentals, it’s considered a business and thus won’t be covered by a basic second home insurance policy.
If you are lucky enough to have a second home, ensure that you’re protecting this asset with the proper insurance. Because each home is unique, your policies for your multiple homes will be separate, though there may be some financial benefit in having them both with the same company.
If your second home is a vacation home that you use only part of the year, investigate unoccupied or vacant insurance. If you use it for short- or long-term rental purposes, you’ll need landlord insurance or a policy that is geared specifically for the type of rental situation you have. A good agent can help you tailor a policy to your specific circumstances.