Does a homeowners insurance policy cover a second home?
Last updated: January 1
Whether it's to live out each winter as a snowbird or spend summer weekends at a lakeside retreat, a second home can have tremendous appeal. But, as with your main residence, a vacation home is something that you'll probably want to protect with homeowners insurance.
Will your insurance policy on your primary home help protect your second home? Read on to learn if homeowners insurance extends to two residences and when you may need separate policies.
Do I need a separate home insurance policy for my vacation home?
You'll likely need to purchase a separate insurance policy for your second home if you want to protect its structure and the contents inside. If you have a mortgage on your second home, your lender may also require you to insure it, says the National Association of Insurance Commissioners (NAIC).
In some cases, insurers may extend the liability coverage portion of your existing homeowners policy to a second home. This means if someone is injured at your vacation home, and you're found liable, your primary home's insurance policy will likely help pay for their resulting medical bills or legal expenses you incur.
Second homes deemed riskier
You may find that vacation home insurance is a little different than your primary residence's policy in terms of cost or coverage. That's because sometimes what makes a vacation home so appealing may be considered more risky (a waterfront location, for instance). Sought-after features like this can sometimes make a property more expensive or difficult to insure, according to the Insurance Information Institute (III).
Second home coverage may be more limited
Insurance for second homes and vacation homes is typically written on a "named perils" basis, says the NAIC. This is because a second home is typically not occupied as your full-time residence and, for example, you might not keep valuable contents there year round.
With a named perils insurance policy, your place would only be covered against events that are specifically outlined in the policy — for example, due to lightning damage or theft. That means if your vacation home and the items inside are damaged by a peril not listed in your policy, it likely wouldn't be covered. On the other hand, covered perils in a standard homeowners insurance policy may be more broad.
Named perils policies may also provide limited coverage for other structures on your vacation home's property. For instance, the NAIC says other structures, like detached garages, sheds or boathouses, may have less coverage than they would in a conventional homeowners policy.
Boosting your vacation home's protection
There are some things you can do to help better protect your vacation home.
You'll find that most homeowners insurance policies include personal property coverage — this coverage helps replace the stuff you own, such as furniture, electronics and clothing, after you file a covered claim. However, it's important to remember that personal property coverage may provide limited coverage for certain items. For example, say you keep a boat at your vacation home. If your boat was destroyed by a covered peril, the personal property coverage in your policy might only pay a small amount toward repairs. In this case, you may want to consider a separate boat insurance policy.
You might also want to consider a personal umbrella policy, which provides greater liability protection. This protection generally extends to a second home, the NAIC says. But, some insurers may require that you don't rent out the property for the coverage to be extended — otherwise, a separate optional coverage may be required when renting out the property. Here's an example of how a PUP policy works. Say a guest at your vacation home is injured and sues you for $1 million, but the liability coverage limit in your homeowners insurance policy is $500,000. You'd be responsible for coming up with the extra $500,000. A personal umbrella policy would help cover these additional costs beyond your homeowners insurance coverage.
You may also want to talk with your insurance agent to find out if there are any other insurance protections for your second home that you may want to consider. For instance, if you have a waterfront property, you might want to purchase flood insurance, because flood damage usually isn't covered by a typical homeowners insurance policy. Or, if you have a boathouse on your vacation home's property, you may be able to increase coverage limits to better protect that structure.
Saving money on a second home insurance policy
You may be able to save a little bit of money on your second home's insurance policy in a few ways. If you purchase the policy from the same insurer you buy other insurance policies from, you may qualify for a bundling discount. Or, if your second home has security features, like a security system or cameras, you may be able to lower your premium —the amount you pay to keep a policy in force. Be sure to discuss any special safety features your second home has with your insurer so you can take advantage of any discounts they may offer.
Insurance for renting out your vacation home
If you decide to rent out your vacation home for part of the year, the insurance policy on your second home may not cover damage that occurs while the home is being rented out, says the III. Depending on your situation, some insurers may require you to purchase an entirely separate insurance policy when you rent out your vacation home. According to the III, below are a few scenarios to consider:
- If you only plan to rent out your home one time, your insurer may extend the protection from your current homeowners insurance policy to the home while it's rented out. Other insurers may require you to purchase an endorsement to the existing policy in order to extend that policy's coverage.
- If you plan to rent out your home multiple times to various guests, some insurers may consider this a "business." You may need to purchase a business policy to help ensure your home is protected.
- If you'll be leasing your home to one person for an extended period of time, you may need to purchase a landlord insurance policy.
By having insurance in place on your second home, you can have some peace of mind knowing your home is protected whether you're there or not.