You might think that insuring a summer home is a breeze: just tack it onto your current homeowner's policy and you're good to go.
Your insurer might even allow you to do this. But the problem isn't that you can't add your seasonal dwelling to your homeowners insurance. The problem is that it might not give you enough protection, even if you increase your liability and contents coverage (find out Why You Need a Lot of Liability Coverage - Even if You're Law Abiding).
If you want to insure your summer home for what it's worth, you'll have to buy a separate policy. But it won't be as straightforward as buying a standard home insurance policy.
Here are some of the factors you'll have to consider when insuring your seasonal dwelling.
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 (see Snow Damaged Your Roof: What Should You Do Now? for related reading)
- Animals or insects can invade the home
- A burst pipe might cause flooding or extensive water damage (see 5 Water Damage Home Insurance Scenarios - Are You Covered? to learn more)
Because of these risks, not every insurer will be willing to assume the risk and issue you a policy (for more about this, see A Look at Uninsurable Risk).
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, your coverage will either cost more or be subject to a higher deductible.
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 a the beach, too, because that places it at higher risk of wind damage and storm surges.
If your home sits on a flood plane or is in an earthquake- or wildfire-prone area, you'll need special coverage. No standard policy will protect you from these perils.
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 addition insurance requirements on you (learn about Choosing the Right Kind of Mortgage).
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.
It's important to know, however, that standard policies might specifically exclude coverage if you use your house this way. Basically, your insurer might 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 (find out What You Need to Know About Your Insurance Before Renting Your Place Out on Airbnb).
Vacation rental policies may not offer the level of coverage you expect from your homeowner’s policy. The following are just a few points you’ll want to review before you decide to buy.
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.
Under some policies, your coverage will be void unless you make regular visits to the property throughout the year.
Replacement Cost vs. Actual Cash Value
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.
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.
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 (see Your Complete Guide to Home Inventories to learn more).
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.