Tips for Insuring Your Second Home
Posted on Tue, May 31, 2011
If you are looking to purchase a second home you should know that the homeowners insurance is going to cost you more than your primary home. Why, you ask? For one simple reason – you’re not there as much.
Here are several tips from SmartMoney.com on how to save on your second-home insurance while making sure you have sufficient coverage.
Install an Alarm System - A central alarm system that detects both fire and burglaries can chop 20% off your premium. Some alarm companies are now offering an internet based service where you can control lights, adjust thermostats for energy efficiency and much more.
Combine Policies and Save - By insuring your second home with the same insurance company as your first home, you could save 5% to 10%. If you have other policies such as several autos or a boat with the same insurer, you could save even more.
Umbrella Policies - If you didn't have an umbrella liability policy before you bought your second home, you have enough assets to warrant one now. An umbrella will extend the liability limits (typically $300,000) on your homeowners, auto and even boat policies for a reasonable sum. Most insurance experts recommend a minimum of $1 million in umbrella liability for people who own two homes. For landlords, umbrella policies are even more important. If one of your tenant's clumsy friends breaks an arm diving into your pool, his lawyer may soon be knocking on your door.
Insurance and Renting - If you rent out your vacation home, you can expect to pay 20% over the cost of ordinary second-home insurance. That's because you'll be there even less than most second-home owners and insurers feel your house is at even greater risk. But if you're planning to rent it out a lot, let your insurance company know. Though it sounds contradictory, some insurers will charge you less if it looks like there will usually be tenants around. An occupied house is less likely to be burglarized or burn to the ground.
Most second-homeowners rent their properties furnished, but if you rent empty, make sure to let your insurer know; you'll get a break on contents coverage. And if your tenant brings his belongings into your house, he's on his own. He can't claim anything under your policy, and although 10% of the contents insurance from his primary residence follows him into a rental, it's not likely to be enough in a disaster. You might require longer-term tenants to carry renter's insurance.