You’ve been dreaming of this moment for years. You can’t believe it’s finally here. Today, you’re purchasing a second home, or a vacation home. You’ll never have to worry about booking hotels or making sure your luggage gets to the right place. You have your own personal oasis to relax in whenever you can sneak away.
But don’t plan a welcoming party just yet; insuring your vacation home should be your top priority. Here’s what you need to know about getting vacation home insurance and what to expect.
Owning a Vacation Home in New York
Maybe you don’t need to travel far for the vacation of your dreams. If your second home is located in New York, you might save on travel costs, but you’ll still have to pay for secondary home insurance.
Even if your vacation home is down the street, you’ll find that in most cases, your policy premiums are higher than those for your primary residence. Because you aren’t physically inside the home on a regular basis, it’s more at risk for theft, vandalism, undetected damage, and other costly incidents you would otherwise notice sooner if you lived there.
What will also play a role in your secondary home insurance cost in New York is the type of property you choose. The age and type of building materials used within your vacation home will impact the cost of insurance.
Have you chosen a high-rise condo or a stand-alone home on the waterfront? A vacation home in a condominium building will have lower insurance costs as the property is maintained by a homeowners’ association. Anything more secluded will cost more.
Finally, take a closer look at your primary home insurance policy. You may find it can be extended to cover a secondary home. This isn’t a guaranteed policy feature though so never assume it’s hidden in the fine print somewhere.
Owning a Vacation Home Outside New York
Is your vacation home located across the country? Whether you’re looking for water, snow, or dry desert heat, your insurance provider is going to consider the inherited risks with your location of choice. Natural disasters you may not have considered could have a drastic effect on your premiums. The local economy and crime rates will play a role in how risky your policy holder considers your new home away from home.
While it would be easy to pick up the phone, call your current insurance provider, and purchase a secondary home policy, it unfortunately isn’t always that simple. If your vacation home is in a different state than where you currently reside, your insurance company may not be able to provide you with coverage, either due to licensing restrictions or restricted offerings.
For example, some companies don’t offer flood insurance. If your vacation home is on the beach or a flood-prone area, and you’re paying on a mortgage, you’re required to have it. You may have to work with a different insurance provider than you originally planned. The good news is that most companies won’t require you to have your primary home insurance with them to purchase a vacation home policy from them.
Changing Your Apartment to a Secondary Home
Are you switching gears and buying a new home outside of the city? Holding onto your city apartment is a great idea and using it as a vacation home is even better. But does this change how insurance works?
If your apartment will be vacant when you’re not there, you’ll need to speak with your insurance broker about your apartment’s location, age, and whether it’s being maintained by a homeowner’s association or not. Your unique combination of features will determine your cost and policy type.
If you’re planning on occasionally renting out your apartment when you’re not using it, you’re going to have to look into additional insurance coverage. In some instances, you’ll just have to notify your insurance company you’re renting out the unit temporarily and it will be covered under your homeowners or renters policy.
But if you’re going to be renting to several different people, they’re labeled as guests instead of tenants and you’re considered a business owner instead of a landlord. This will require a business policy.
If you’re renting out to a single family or individual for longer periods of time, a landlord policy is most likely necessary. A landlord policy will cover physical damage to the structure caused by fire, wind, hail, ice, snow, lightening, or other covered perils as listed. It also covers any of your own personal property you leave on-site for maintenance or tenant-use, such as snow blowers or appliances. It may also include liability coverage in case a tenant or guest gets hurt on your property. Some provide coverage for loss of rental income you may experience if the unit becomes unrentable while being repaired from a covered loss.
Just remember, your insurance doesn’t cover the possessions of your tenants. You may want to require they purchase renters insurance to protect their items.
Bonus Tips for Insuring Your Vacation Home
Always work with an insurance broker who knows the ins and outs of vacation home insurance. They’ll be able to make sure you’re covering all potential incidents with a custom policy. But just so you’re not caught off guard, here are a few other situations to consider when designing your policy.
- You’ll need to keep your home furnished to qualify for secondary home insurance. While you’re allowed to bring some items back and forth, removing everything from your vacation home when you’re not there makes it a vacant home, which requires a different kind of insurance.
- If it’s in your budget or the only difference between one neighborhood and another, and makes sense financially, purchasing a vacation home with a caretaker or that’s under the supervision of a property management company can significantly lower any associated risks with the home and lessen your premiums.
- If your home is on the water, you’ll need to purchase a separate flood policy as standard home insurance doesn’t include such coverage. The associated rates are pricey but necessary and certainly worth it. The same concept goes for homes in earthquake prone areas. Make sure you have coverage and purchase a separate policy if necessary.
- If your vacation home is in a wooded or rural area, you could be at higher risk for wildfires and your premiums will probably be reflective of such. To lower your premium, choose a location near fire hydrants and make sure you’re served by a nearby fire department.
- Make sure your season-proof your vacation home accordingly. A burst pipe can cause serious damage, especially if undetected for several months when you’re away.
If you’ve finally been able to secure your vacation home, don’t make the mistake of underinsuring it. Speaking with an insurance broker today can make sure your future vacations are as relaxing as possible.