Insuring Your Vacation Home

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Ah, vacation. If you've found a favorite vacation spot and have time to visit frequently, hotel costs can add up fast, so it might be tempting to buy a vacation home there. If you're considering this type of investment, consider these things first: Will you visit several times a year and keep it vacant the rest of the year? Will you rent it out to other vacationers when you aren't there to help cover the cost of ownership? Or will you live in it several months of the year and keep it vacant the other months? All of these are factors in the type of insurance you'll need for it.

Vacancy/No Vacancy
When a house, condo or townhome is vacant for a long period of time, the risks might be the same, but if nobody is there to report a problem or do anything about it, the damage could be worse by the time it's discovered. For example, Joe and Vicki are snowbirds who live in the Midwest for six months of the year and Florida six months of the year. One year while they were in their Midwest home, a pipe burst in their vacation home. They didn't know until they returned in November, and by that time, mold had started to grow on the drywall and carpet, and the baseboards had started to rot. If they had been there when it happened, they could have turned off the water when the pipe burst and dried everything immediately, significantly reducing the amount of money it took to fix the problem.

This is just one example of why it's risky to leave a house vacant for a long period of time, and why you need additional coverage if it is.

If you plan to rent the home out to other vacationers when you're not there, you'll need additional liability coverage. This is especially important if the house you're renting out has a pool or hot tub. The type of coverage you'll need depends on the length of your rental terms, too. If it's to other vacationers, you may need to look into a business policy. If you're renting it to the same person for six months to a year, you may need a landlord policy.

House or Condo?
The type of property you buy as your vacation home will dictate what type of coverage you need as well. For instance, a condo will cost less to insure than a house. According to the Insurance Information Institute, the cost of insuring the structure of the condominium unit will generally be included in the monthly maintenance fees, while your personal condo insurance will help cover your belongings and specific areas of the unit listed in the policy.

Location, Location, Location
Another factor to consider is the location of your vacation home. Favorite vacation home spots are often near the ocean or in the mountains—and each of those places carry specific regional hazards that may require additional insurance. Hurricanes, landslides, avalanches and wildfires are all natural disasters that can occur in these areas and make them higher risk. Because of this, homes in these areas may cost more to insure.

As you can see, there are a lot of factors that go into insuring a vacation home. To minimize confusion, talk to an agent about how you intend to use the property so they can help you get  the proper coverage. Feel free to ask questions too—the more you understand about your coverage, the more you can relax and enjoy that vacation home.

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