Vacation Home Insurance: How To Insure Your Summer Home

You might think insuring a summer home is a breeze, that you can just tack it onto your current homeowners insurance policy and be good to go.

Your insurer might even allow you to do this. The problem is that a primary policy may not give you enough protection, even after you increase your liability and contents coverage. To insure your summer home for what it’s worth, you’ll likely need a separate policy. And it won’t be as straightforward as buying a standard home insurance policy.

Factors Affecting Cost Of Coverage

Since seasonal properties aren’t occupied year-round, they’re considered higher risk.

Lots of things can happen when your seasonal home is left unattended:

• A storm can send a tree branch through a window, leading to indoor weather damage
• Accumulated snow can cause the roof to collapse
• Animals or insects can invade the home
• A burst pipe might cause flooding or extensive water damage

Because of these risks, not every insurer will be willing to assume the risk and issue you a policy.

Insurers that do write the policy typically charge 10% to 15% more than they would for a primary home. State Farm runs about a 10% surcharge for secondary homes, and Nationwide is closer to 20%. The national average for $300,000 of dwelling coverage on a vacation home is $2,693 a year, but the spread between states is enormous, ranging from about $1,040 in Vermont to $12,458 in Florida. The Insurance Information Institute identifies location, property type, and amenities as the main factors that drive the rate.

Location

Your holiday home is a bigger insurance risk if it’s located in a remote area far from emergency services. The less accessible it is, the more your coverage will cost or the higher the deductible will be.

A cottage on an island or a ski chalet outside of town will cost an insurer more to repair or replace. And because help isn’t nearby, it is more likely to cause a substantial loss if something does happen. Your premiums might be higher if your summer home is on the beach, too, because that places it at higher risk of wind damage and storm surges.

If your home sits on a flood plain or is in an earthquake- or wildfire-prone area, you’ll need special coverage. No standard policy will protect you from these perils.

Property Type

Insurance costs vary by property type, construction, and the age of the structure. A wood frame chalet may cost more to insure than a masonry cottage, and an older home will probably cost more than newer construction.

A condominium may cost less to insure than a standalone structure, since the homeowners association insures the common areas and exterior of the building. Condo insurance can cover the unit and your belongings, but don’t assume you can just buy a standard policy. Most insurers will void your coverage if you leave the property vacant, so you’ll need to get specific coverage.

If you have a mortgage on your vacation home, your lender might impose additional insurance requirements on you.

Amenities

Does your summer getaway have a pool, hot tub, wood stove, or fireplace? Is there a trampoline, treehouse, or zip line on the property? Insurers won’t necessarily deny coverage, but they may charge you a higher premium since these amenities increase risk.

Renting Your Seasonal Home

Your seasonal home is going to sit empty most of the year, so you might want to rent it out to make a bit of extra money when you’re not using it.

A standard policy will likely exclude coverage if you use your house this way. Your insurer may deem this a business activity, which means you’ll need to insure it using a business or vacation rental policy. If you buy one of those policies, you can expect your insurance costs to increase substantially.

The higher cost is only one obstacle. Looking for vacation rental insurance can be frustrating. Many companies will not insure seasonal rentals, and those that are willing to might only agree to do it if you insure your primary dwelling with them as well. Others are strict about which building types and layouts they will insure, limit the frequency of rentals, or even refuse coverage if you stay on the property.

Specialty carriers like Proper Insurance, CBIZ, and Foremost write rental-permitted policies as their core product, and rental-permitted policies generally run 25% to 50% more than the equivalent non-rental seasonal policy. Honestly, if you plan to rent more than a couple of weekends a year, treat the rental insurance question as a separate decision from the underlying vacation home policy.

Potential Issues

Vacation rental policies may not offer the level of coverage you expect from your homeowner’s policy. A few specific items deserve a closer look before you commit.

Named Perils Policy

A standard homeowner’s policy usually covers a range of perils including lightning, fire, hail, wind, and smoke.

Many seasonal home policies, however, only cover named perils. If a peril isn’t listed in the policy, you’re not covered for any damage or loss that arises from it.

Named perils policies often limit coverage for other structures on your vacation property, too, such as docks, sheds, boathouses, and garages.

If you go the dwelling-fire route, the policy form matters more than people realize. DP-1 is the most basic and cheapest. DP-3 is the broadest, written on an open-perils basis for the structure, similar to a primary HO-3. The savings on DP-1 or DP-2 often aren’t worth the gap in coverage.

Property Visitations

Under some policies, your coverage will be void unless you make regular visits to the property throughout the year. Common requirements include checking the property at least every 30 days, draining pipes before winter, maintaining a minimum interior temperature, or having a property manager check on the place on a defined schedule. Skip the required visits and the policy may not respond when you file a claim.

Replacement Cost vs. Actual Cash Value

Not all policies offer replacement cost for your seasonal home. If you buy a policy that provides actual cash value, you’ll only receive the estimated value of your home, less depreciation.

That’s better than nothing, of course. But if you’re insuring an older home at its actual cash value, you probably won’t be able to replace it after a total loss because labor and materials cost more today.

Finding Coverage

You can certainly look online for potential insurers, but coverage options for seasonal dwellings and the intricacies of these policies are difficult to comprehend.

Consider working with an independent agent, instead. They can access extra and surplus line carriers that you would be hard pressed to find on your own, and they can give you a real apples-to-apples comparison of the policies offered by different insurers.

For higher-value properties (over roughly $1 million in dwelling coverage), the high-net-worth specialists are worth asking about. Chubb’s Masterpiece, AIG Private Client, PURE, Cincinnati’s Executive Capstone, Berkley One, and Vault all write second homes routinely. Their policies are typically open-perils with replacement cost and few of the restrictions you find on standard market products.

If you keep a motorized boat or an ATV on the property, these usually require separate coverage. Your agent can often bundle these policies to save you money.

When shopping for insurance, have your agent review your homeowner’s and umbrella policy, if you have one. They can check policy exclusions to spot insurance gaps and suggest appropriate solutions.

Before you visit an agent, create a home and vacation home inventory of their contents. It helps them fine-tune your coverage so you don’t pay more than necessary and speeds the claims process too.

Conclusion

Your summer home deserves as much protection as your primary dwelling. Don’t settle for sub-par coverage riddled with exclusions. Take the time to find the right insurance policy so you can be confident everything will be fine, no matter the time of year.