Do I need to buy homeowners insurance for my second home?

Whether you’re purchasing a second home as a rental property or somewhere to vacation throughout the year, you’re going to need a homeowners insurance policy that covers your property and assets. 

The type of homeowners insurance that you need for a secondary residence is similar to that of a primary home, but insurance rates are generally going to be higher for second homes due to the increased risk of claims. Your policy premiums are based on how likely you are to file a claim, so the more at-risk your home is to break-ins and weather catastrophes, the higher your insurance rates will be. 

Since secondary homes are more likely to be unoccupied in spurts throughout the year — and therefore are more susceptible to burglary and sustained damage from a leak or fire — insurance companies will apply a surcharge to secondary home insurance policies. However, there are plenty of ways to keep your second home insurance rates down.  

How to insure a second home

Homeowners insurance for secondary homes contains the same coverage as primary home insurance, providing coverage for your home and personal property from fire, weather-related damage, and theft. It also covers your personal liability in the event you are found legally responsible for property damage or bodily injury.

However, you may find that insurance for your secondary home costs a little more than the home insurance you purchased for your full-time residence. That’s because vacation homes are empty throughout much of the year and face a higher risk of insurance claims than primary homes.

That being said, if you have a clean claims history, decent credit, and your home isn’t a literal shack on the beach, you should be able to find an insurance company to insure your property at a rate that works for you. Farmers Insurance, for example, sells homeowners insurance policies geared specifically for seasonal and vacation homes, and just about every other major carrier has similar offerings.

If your vacation home is located in a coastal county and you’re not able to find homeowners insurance on the private market, you can get coverage through your state’s FAIR Plan, which is last-resort homeowners insurance with limited amounts of coverage. FAIR Plans are typically pretty expensive for the coverage that you’re getting, so try to avoid this if possible. 

Can you cover two homes under a single homeowners policy?

You usually cannot insure two homes under a single home insurance policy since every home is different and has its own unique coverage requirements. 

However, several insurers give policyholders the option to take out two home insurance policies as part of a policy bundle, with one bill and other policy perks. Bundling policies with a single company can also lower your insurance premiums.

What should a second home insurance policy cover?

The type of homeowners insurance coverage that you’ll need for your second home depends on how you plan on using the property.

If you intend to turn it into a rental property as a source of income, for example, you’ll need something more along the lines of landlord insurance to protect the home and any potential loss of income. If you plan on renovating the home and turning it into an investment property, you may need builders risk insurance throughout the course of construction. 

But if you plan on simply using the home as a vacation retreat or somewhere you live part-time, it’ll likely just require a regular home insurance policy, but you’ll need to inform your insurer that the property is a secondary residence, not primary. Failing to do so could negate your coverage in the event of a claim. 

A second home insurance policy will provide the following coverages:

• Dwelling coverage - Covers the structure of your secondary residence against perils like fire, weather-related damage, and theft

• Other structures coverage - Covers additional structures on your property, including gardening sheds, garages, and boat docks

• Personal property coverage - Covers personal belongings in your second home, such as furniture, clothing, kitchenware, and more

• Loss of use coverage - Covers additional living expenses in the event your second home becomes uninhabitable due to a covered loss and you need to live somewhere else temporarily

• Personal liability coverage - Covers legal and medical expenses if you’re held legally responsible for someone else’s injury or property damage

• Medical payments coverage - Covers guests’ medical expenses if they sustain a minor injury on your property

Is second home insurance more expensive?

Yes, second home insurance is typically more expensive because insurers believe you're more likely to file a claim due to your home being unoccupied for some of the year or being close to high-risk flooding or wildfire areas. This puts your rates for your second home up there with the high rates for other high-risk properties.

Factors that affect secondary home insurance rates

1. How often the home is occupied

Most second homes are used as vacation homes, and since life isn’t simply a year-round vacation, it’s going to have a lot of alone time. For insurance companies, the home’s vacancy is a risk, and they’ll charge you higher rates based on that factor alone. There’s a few reasons for this:

• Vacant homes are more likely to be burglarized

• They’re more likely to have hazards (like leaks, fires, or infestations) go undetected

• They’re more likely to be vandalized

Liability risk is also considered when rating vacation homes. For example, if your next-door neighbor’s kid sneaks onto your property, uses your pool, and gets injured or drowns, you could be saddled with liability for legal expenses for not securing your property well enough. Conversely, if your home has a groundskeeper, or is in a gated community or HOA with security cameras, that could potentially lower rates on your vacation home.

2. Location

You may be wondering why your modest-sized oceanside retreat in Naples costs a couple thousand more a year to insure than your 5,000-square-foot split-level in Duluth. The answer is that with home insurance, like a lot of other things, location is everything. Waterfront homes are deemed risky by insurers because of the heightened threat of windstorm or hurricane damage, and that means, at least in the case of the above example, that your premiums could be significantly higher. 

3. Vacation home features

Whether your vacation home is a mobile or manufactured home, tiny house, historic home, or log cabin will all affect rates. Certain amenities that you have for your vacation home, like a hot tub, trampoline, sauna or pool, can also cause your insurance rates to go up since they can increase your liability risk.

Homeowners insurance if your rent out your second home

If you plan to rent out your secondary home during the period of time you’re not there, your insurer will likely increase your rates, or they may require you to add short-term rental coverage to your homeowners policy. Certain rental services like Airbnb offer their own insurance, but it’s not sufficient on its own.

If you plan to rent out the home for long periods of time, you’ll need to get a landlord insurance policy, which is standard for any rental property. 

How to save on vacation home insurance

There are a number of ways you can make your second home insurance costs more affordable. Insurance companies offer many of the same discounts for second homes as they do for primary residences, including discounts if you:

• Install security cameras and fortify your property

• Install risk-prevention systems, like water leak sensors

• Equip your home with a central burglar alarm or smoke detector

• Bundle your primary residence insurance and secondary home insurance under one policy package

• Buy a vacation home that’s part of an HOA community

• Re-shop your homeowners insurance policy on an annual basis