Homeowners Insurance for Your Vacation Home

A vacation home should be relaxing. While you can legally own a home without protecting it with a homeowners insurance policy, what happens if you loose your home in a fire? That's why lenders require homeowners' insurance coverage, even for vacation homes. There isn't a one policy fits all answer for homeowners insurance so work with your insurance professional to decide which type of coverage is best for your summer home.

Homeowners Insurance on a Second Home

Did you know that homeowners insurance on a second home could cost more than on your primary residence? It may be worthwhile to check with your agent to see if there are ways to obtain discounts for your coverage. Some companies offer package or umbrella policies in which more than one home can be covered, saving you as much as 5% to 10%. Additional discounts may be available so make sure to ask your homeowners insurance provider what discounts apply to you.

On the lower end of the coverage scale, a cash value policy pays to replace your vacation home or possessions minus a deduction for depreciation, while a mid-range replacement policy pays for the cost of rebuilding or repairing your vacation home without deducting any depreciation.

A guaranteed or extended replacement cost policy offers the highest level of coverage, and could pay whatever it costs to rebuild your vacation home; even if it exceeds the policy limit. This may become a real consideration if, for example, you've purchased an older cabin that will cost more to rebuild than what you paid for it.

Save on Homeowners Insurance

There are also things you can do that may warrant additional savings, like installing an alarm system. Installing an alarm system can lead to savings on your homeowners insurance policy while providing extra security. After all, a vacation home is often empty for long periods of time. In cold weather areas, the Insurance Information Institute suggests checking fireplaces or wood stoves to make sure they're working properly, and making sure you winterize the home if you'll be gone for an extended period of time.

If you haven't bought that vacation home yet, there are a few things worth considering, before you buy. In areas susceptible to flooding, you can purchase separate, excess flood coverage, provided through a government program in addition to your homeowners insurance policy.

If forest fires are a concern, get guidance from the local fire department about the latest methods of loss prevention. This could mean something as simple as clearing vegetation from the perimeter of the home. If you're buying a non-U.S. property, check to see which insurance carriers even offer policies.

Whether you're buying a cabin in the Pacific Northwest or a beach cottage in North Carolina, make sure your homeowners insurance provides adequate coverage. Getting the right amount of homeowners insurance and implementing a loss prevention plan are the best ways to ensure your vacation home is protected.