Vacation home insurance: what you need to know

Just like a primary residence, vacation homes should be protected with home insurance. Vacation homes are considered higher risk, and may cost more to insure

If you’re buying a vacation home, you’ll need to protect it with a homeowners insurance policy, just like you would for your primary residence.

Homeowners insurance for a vacation home contains the same coverage as a policy for a primary residence. However, vacation homes typically cost more to insure since they are considered higher risk.

Vacation homes are viewed as riskier than primary residences because they tend to only be occupied for a portion of the year. The location of a vacation home will also be factored into insurance rates. If your vacation home is located near the coast, for example, insurance companies may charge you higher rates due to the increased risk of weather-related property loss.

KEY TAKEAWAYS

  • Vacation homes are generally more expensive to insure than primary homes because they’re frequently vacant

  • Insurers will also take a vacation home’s location into consideration when determining your rates. If your vacation home is located near the coast, your rates may be higher due to the high risk of inclement coastal weather

  • You can lower the cost of vacation home insurance by installing safety features like burglar or fire alarms and security cameras

How do you insure a vacation home?

Homeowners insurance protects your home and personal property from damage and theft. Home policies also contain liability coverage in the event that you are found liable for property damage or injury to someone else, like if someone is injured while using your pool.

You generally can’t insure two homes under one homeowners policy, so even if you already have home insurance for your primary home, you’ll still need to purchase a separate insurance policy for your vacation home.

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How much does vacation home insurance cost?

Since vacation homes are frequently unoccupied, they’re more at-risk of burglary and sustained property damage from a water leak or fire.

For example, if a pipe in your vacation home freezes and bursts, your property is more likely to incur further damage than if you were living there full time. This increased likelihood of insurance claims makes vacation homes more expensive to insure than primary homes.

Below are other factors that may cause your vacation home insurance to be more expensive.

  • The location of your vacation home. Many vacation homes are located in idyllic areas, like the beach or the mountains, but those environments can come with severe weather risks, like hurricane or snow and ice damage. Depending on the home’s location, insurers may also require separate windstorm or hurricane deductibles, which are typically higher than deductibles for other risks.

  • Vacation home features. If your vacation home has extra features, like a pool, hot tub, or trampoline, your rates may be higher because they increase your liability risk.

What does vacation home insurance cover?

Vacation home insurance contains the same coverage components as primary home insurance does.

  • Dwelling coverage - Protects the structure of your vacation home from damage like fire damage and weather-related damage

  • Other structures coverage - Coverage for the other structures on your vacation home's premises, like a shed

  • Personal property coverage - Protects your personal belongings from damage and theft

  • Loss of use coverage - Covers additional living costs if you need to temporarily stay elsewhere while your vacation home is repaired

  • Personal liability coverage - Covers legal and medical costs if you're found legally responsible for property damage or bodily injury

  • Medical payments coverage - Covers guests' medical expenses if they are hurt while on your property, no matter who is at fault

Additional vacation home coverage

Insurance companies offer endorsements that you can add to a homeowners policy to enhance coverage. Depending on your vacation home’s location, you may need to purchase flood or earthquake insurance in addition to homeowners insurance.

Flood insurance for your vacation home

Homeowners insurance doesn’t cover flood damage. If your vacation home is located in a flood-prone area, you may want to consider purchasing a flood insurance policy.

Most flood insurance policies are administered through the NFIP (National Flood Insurance Program), but you can also purchase flood insurance through the private marketplace.

Extended replacement cost coverage

When you file a dwelling coverage claim, you’re typically reimbursed your home’s replacement cost, meaning your insurer pays for the amount it costs to rebuild your home (not your home’s market value).

Extended replacement cost coverage can increase your home’s insured value an additional 25% or 50%. You may want to consider extended replacement cost coverage for your vacation home if it is located in an area of the country that experiences severe weather or natural disasters, because natural disasters can result in inflated costs for building materials and labor, which would raise the overall cost of your rebuild.

Earthquake insurance

Homeowners insurance doesn’t cover earthquake or mudslide damage. Insurance companies may offer earthquake endorsements or you can purchase a standalone earthquake insurance policy.

Personal umbrella policy

An umbrella policy provides additional liability protection in the event of expensive claims that exceed your policy’s liability coverage limit.

Personal umbrella policies are typically offered in million dollar increments ranging from $1 million to $5 million.

Homeowners insurance for vacation rentals

If you plan to use your vacation home as a rental, you may need additional coverage or a different type of policy.

Below are common types of coverage you may need for a vacation rental:

  • Short term rental coverage - Extra coverage for property damage and theft if you rent out your home for periods of time.

  • Landlord insurance - Landlord insurance is designed for people who rent out their homes for long periods of time or on a full-time basis. Landlord insurance contains property, liability, and loss of income coverage.

How to get affordable vacation home insurance

Vacation home insurance may be more expensive, but there are a number of ways to lower your premiums.

  • Check with your insurer about discounts. You may qualify for discounts if you install burglar alarms or cameras.

  • Install storm resistant windows

  • Upgrade your home systems

  • Re-shop your insurance annually

Property and Casualty Insurance Expert

Kara McGinley

Property and Casualty Insurance Expert

Kara McGinley is an insurance editor at Policygenius, specializing in home, auto and renters insurance. She previously worked as a freelance writer and copywriter, and has been writing about insurance since 2019. Kara is an expert at making complicated topics like property insurance simple to understand. Her work can be found in Teen Vogue, The Culture Crush, and more.

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