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Buying insurance for a second home isn’t necessarily the same as purchasing a homeowners policy for your primary residence.
The coverage that makes sense for a vacation or seasonal home can depend on several factors, including how often the property will be used or if you plan to rent it out. Location is another consideration that can affect the type of coverage you might need—and your premiums.
Read on for a look at how a separate “second home” insurance policy works, how much it can cost, and how you might choose to customize coverage for your special getaway.
Key Points
• Second home insurance is designed to cover a property that isn’t your primary residence, such as a beach cottage or mountain getaway.
• Some types of seasonal or rental properties face unique risks because of where they’re located or if they’re unoccupied for extended periods. This can affect the insurance coverage that’s required.
• If you have a mortgage on your second home, you can expect your lender to require that the home is insured. But even if you don’t have a mortgage, you’ll likely want to insure the property to be sure you’re financially protected.
• Just as with a primary homeowners policy, you can customize your second home coverage to fit your needs. Shopping online can help you compare costs and other options.
Does Your Primary Home Insurance Cover a Second Home?
In some instances, the liability portion of a primary home insurance policy may extend to a second home. For example, if someone was injured at your vacation home and you were found legally responsible, the policy you have for your primary home may help pay the bills. But this isn’t always the case, and you should check with your current insurer to be sure this applies to your coverage.
Keep in mind that your primary homeowners insurance policy was designed to cover your main residence. If you want to protect your second home—the structure and its contents—you should be prepared to purchase a separate policy that’s created for that purpose.
If you have a mortgage on the second home, your lender will likely require that you carry a certain amount of insurance on that property. But even if you own the home outright, purchasing a second home policy can help you protect your investment.
How Second Home Insurance Differs from Primary Home Insurance
Just as your primary home insurance coverage was built around the specifics of your main residence, a second home policy can be tailored to protect against the unique risks of a vacation home. For example:
• A seasonal home may remain unoccupied for long stretches of time. Or it may be in a community where many residents are only there for part of the year. This means the home may be less secure than a property in a neighborhood that’s populated year-round.
• A getaway on an ocean or river, or in the woods or mountains, may require separate flood insurance coverage or extra insurance for wildfires.
• If you intend to rent out your second home for part of the year, or if you expect to offer short-term rentals, your insurance coverage should be based on those plans. And you can expect your premiums to be higher.
What Does Vacation Home Insurance Cover?
Though you can modify your coverage to fit your needs and budget, a second home or vacation home insurance policy generally covers the same things that a primary homeowners insurance covers, including:
• The main structure of your home
• Other structures, such as pool houses or sheds
• Personal property, including appliances or lawn equipment
• Personal liability
• Loss of use
Vacation home insurance can also cover the same types of perils as primary home insurance, such as:
• Theft
• Vandalism
• Fire, smoke, and lightning
• Wind and hail
• Falling objects
• Explosions
• Damage from vehicles or planes
• Accidental discharge of water
• Heavy snow or ice
To help keep the cost of premiums down, some insurers may provide something called “named peril” coverage for owners of second homes. Unlike the broader protection typically provided by a primary homeowners policy, this limited coverage extends only to specific events or hazards named in the policy. A named peril policy may also limit the coverage on other structures on your property, like a garage, shed, or boathouse. It’s important, therefore, to weigh the pros and cons of this type of coverage, which can leave owners more vulnerable to unpredictable issues.
Recommended: Hazard Insurance vs Homeowners Insurance
How Much Does Second Home Insurance Cost?
The cost of second home insurance can vary based on several factors, including:
• Location. If your vacation home is in an area that’s often affected by extreme weather—hurricanes, flooding, wildfires, ice storms, and blizzards—the property may cost more to insure.
• How often you use the property. If you only spend a few months of the year in your second home, burglary, vandalism, and other risks can increase, which may push up the price of your premiums.
• Amenities. Extras like a pool, hot tub, or boat dock—which can add to a property’s liability risk and cost more to repair when damaged—may result in higher premiums.
• Security. Installing and maintaining an up-to-date security system could help reduce risk and, therefore, costs. Belonging to a homeowners association (HOA) that provides security and maintenance could also help keep premiums down.
In some cases, you may find it makes sense to take out a separate flood insurance policy for your vacation home, or separate wildfire coverage if you’re in a high-risk location. A separate umbrella insurance policy could also help provide more liability protection.
Insurance Considerations for Renting Out Your Vacation Home
Renting your vacation home to others can also affect the coverage you’ll require and how much your homeowners insurance costs. Whether you’re running the numbers for your personal budget or building a business plan, your insurer can help you price out different policy options.
• If your rentals will be few and far between, your insurer may extend your coverage to the rental period. But be sure to ask: Some insurers may require an endorsement or separate policy to cover the rental period.
• If you expect to rent out the home regularly, you may have to purchase a business policy to ensure complete protection.
• If you plan to lease the home to one renter for an extended time, you may have to purchase separate landlord insurance.
Recommended: Homeowners Insurance Glossary
How to Save on Second Home Insurance
There are a few things you can do that may help reduce the cost of your secondary home insurance premiums.
• Bundling policies. Customers who purchase multiple policies (home, auto, etc.) from the same insurer may be able to get a discount.
• Looking for other discounts. Ask about other ways to save—by signing up for automatic payments, for example, or paying your premium in full at the start of each year.
• Optimizing deductible amounts. If you’re confident you can cover the out-of-pocket costs should you have to make a claim, choosing a higher deductible could help reduce your premium.
• Improving safety and security features. Consider adding or improving the home’s security system and/or other “smart home” features, such as automated lighting or a water detection system.
• Shopping around. Comparing quotes can help you narrow down your options. Be sure to note how certain policy differences can affect premiums, and keep in mind the reputation of the insurers you’re considering.
The Takeaway
Second homes often face unusual risks that can influence the level of insurance coverage owners must carry. This can make purchasing second home insurance more complicated—and more expensive—than buying primary home insurance.
How can SoFi help? Shopping online can make finding the right coverage quick and convenient. You can compare policies and build a plan that suits your needs and your budget.
Your home is one of your most important financial assets — making sure it's properly covered is part of protecting everything you've built. SoFi makes it easy to shop and compare homeowners insurance quotes from top carriers, all in one place. Explore your coverage options.
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FAQ
Do you need separate insurance for a second home?
Homeowners insurance isn’t legally required in any state, but if you have a mortgage on the property, your lender will likely require a certain amount of coverage. And just like primary homeowners insurance, a second home policy can help you protect your investment.
Is vacation home insurance more expensive than homeowners insurance?
It definitely can be. Second homes generally face unique risks that can require extra coverage.
Does second home insurance cover flood or earthquake damage?
You will likely have to purchase a separate policy to cover certain perils, including earthquakes, floods, and wildfires.
What type of insurance do I need if I rent out my vacation home?
You may need to purchase a business insurance policy or landlord insurance to cover your vacation home rental.
Can you bundle second home insurance with your primary policy?
Yes, bundling your second home insurance with your primary home insurance and/or auto policy could help you save money on your premiums.
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