Second Home Insurance: Protect Your Vacation Home

Different uses and different risks mean insuring a second home isn’t exactly the same as insuring your primary residence.

Theresa Stevens
Theresa Stevens
  • AFCPE Accredited Financial Counselor

  • 6 years experience in the personal financial industry

Theresa is a writer and former financial advisor with experience helping clients solve money challenges. She uses her expertise to clarify complex personal finance concepts.


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Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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Updated April 20, 2023 | Reading time: 5 minutes

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Second home insurance, also known as vacation home insurance, provides coverage for a property other than your primary residence. Whether you use your second home as a personal getaway or rent it out to others, second home insurance is essential for protecting your property from unexpected events, such as fire, theft, and liability claims from renters and guests.

Choosing the best second home insurance depends on how you use the property. For example, your coverage needs may vary if the property remains unoccupied for prolonged periods, or if you rent it out short- or long-term. Here’s what to know about choosing the best homeowners insurance for second homes.

What is second home insurance?

Purchasing a second home to enjoy warmer winters or summers close to the beach is appealing, but it comes with its own set of risks. While second home insurance provides protection similar to primary home insurance, it’s typically more expensive and restrictive than standard homeowners policies due to the risks associated with owning a second home.[1]

For example, second homes are often in risk-prone areas, such as waterfront locations. Additionally, second homes are more likely to remain vacant for extended periods, increasing the possibility of undetected hazards, such as mold and burst water pipes, and opportunities for burglars.

Like a traditional homeowners policy, second home insurance covers your property and personal belongings against damage and liability. The premiums can be expensive, which is why comparing quotes from multiple insurers is crucial.

Other ways to lower the cost of second home insurance are to bundle your policies with a single insurer and install an alarm system. Depending on your situation, you may want to consider adding umbrella and rental loss coverage for extra protection.

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What does second home insurance cover?

Second home insurance provides similar protection to primary home insurance, including:

illustration card https://a.storyblok.com/f/162273/100x100/c922a01b77/house.svg

Dwelling

Dwelling insurance helps cover damage to your homes physical structures from a covered peril.

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Personal property

Personal property coverage reimburses you for the value of electronics, furniture, and other possessions damaged or lost due to a covered peril.

illustration card https://a.storyblok.com/f/162273/x/48eec53b65/desk.svg

Liability

Liability coverage helps pay costs if someone sues you for an injury that occurred on your property.

If you rent out your second home, you’ll also want to consider landlord insurance.

Check Out: Landlord Insurance and Rental Property Coverage

Check Out: Landlord Insurance and Rental Property Coverage

What does second home insurance exclude?

While secondary home insurance covers a variety of situations, there are some common exclusions to be aware of, such as:

  • Floods: Second home insurance policies often don’t provide coverage for flood damage. If your property is located in a flood-prone area, such as a beach house, it’s important to purchase separate flood insurance to protect your home.

  • Earthquakes: Second home insurance may not cover damage caused by earthquakes. Some insurers offer earthquake insurance as an add-on to your existing insurance, while others offer it as a stand-alone policy.

  • Wear and tear: Second home insurance typically covers sudden and accidental damage, but it may not cover damage that occurs over time due to normal wear and tear or lack of maintenance.

    Important Information

    Just 1 inch of floodwater can cause more than $25,000 in damages to a home, according to the Federal Emergency Management Agency.[2]

How much does second home insurance cost?

Generally, second home insurance costs may be higher than insurance on your main residence due to the increased risk factors associated with second homes. Landlord policies typically cost 25% more than standard homeowners insurance policies, according to the Insurance Information Institute.[3] However, the exact cost of your policy will depend on several factors, such as the location, usage, and specific coverage requirements of your property.

Factors that affect the cost of second home insurance

The following factors may affect the costs of insuring a second home:

  • Location: The location of your second home can affect the cost of your insurance. If your property is in an area prone to natural disasters, such as hurricanes or wildfires, your insurance premiums may be higher.

  • Vacancy: If your home is vacant for stretches of time, it increases the risk of burglary, squatters, and undetected hazards, such as water leaks.

  • Amenities: Having a pool or hot tub increases your liability exposure and may result in higher insurance premiums to balance out the extra risk.

  • Rental risks: If you rent out your home as a short-term vacation rental, you have an increased risk of damage and liability.

Do you need second home insurance?

Almost all property owners will benefit from insurance on their second home. Additionally, if you have a mortgage on your second home, the lender may require you to have insurance on the property as a condition of the loan. Depending on the location of your second home, the lender may also require flood insurance.

Pros of second home insurance
  • Helps cover costs of damage for covered events

  • Protects you financially in case someone is injured on your property

Cons of second home insurance
  • Typically more expensive than primary home insurance

  • May be difficult to find insurers in high-risk areas, such as near the beach or in floodplains

How to get cheap second home insurance

Buying a second home insurance policy involves three basic steps:

  1. Determine your insurance needs.

  2. Get quotes from multiple insurance companies.

  3. Choose the policy that best meets your needs.

Comparing policies from multiple home insurance companies can help you find the best deal. The Insurance Information Institute suggests getting at least three quotes for second home insurance and reviewing your policy before your annual renewal to see if better rates are available.

Some other ways to save on second home insurance are to bundle your primary home insurance and second home insurance policies and install security features, such as burglar alarms and deadbolt locks. Safety measures like sprinklers and water leak detectors may make you eligible for discounts.

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Second home insurance FAQs

A second home can be both a getaway for your family and an added source of revenue. But getting insurance for it may not be as cheap or straightforward as insuring your primary residence. To help, here are answers to some commonly asked questions about second home insurance.

  • Why is vacation home insurance more expensive?

    The cost of vacation home insurance is typically higher than primary residence insurance due to the increased risk that vacation homes pose to insurers. Since vacation homes aren’t occupied as frequently as primary residences, they’re more vulnerable to theft, vandalism, and damage that may go unnoticed, such as burst water pipes. Additionally, they’re often in high-risk areas, like near the beach or in a flood zone.

  • Can you insure two homes with the same insurance policy?

    Owning multiple homes typically requires purchasing separate insurance policies for each property. Since every house has different characteristics and risks, insurers will assess these factors to determine the appropriate coverage and premiums for the property. However, you may be able to insure both homes with the same company on different policies.

  • Do you need a second home insurance policy with umbrella insurance?

    While not necessary, adding umbrella coverage to your second home insurance policy can provide an extra layer of protection. Umbrella insurance offers personal liability coverage over and above what your underlying insurance policies provide. This helps protect you from financial losses if someone sues you for an injury that you’re liable for.

    Keep in mind if you have a mortgage on your second home, your lender will likely require you to carry second home insurance.

  • Do you need additional insurance if you rent out your vacation home?

    You typically need multiple insurance policies if you rent out your vacation home. If you plan to regularly rent out your second home on a short-term basis, you may need separate business coverage, according to the Insurance Information Institute. If you plan to rent your second home to one tenant for a longer period of time, you’ll need a landlord or rental dwelling policy.

  • Do homeowners insurance costs increase if you rent out your house?

    You might need to purchase additional coverage if you rent out your house, resulting in higher insurance premiums. Landlord insurance policies typically cost 25% more than standard homeowners insurance, according to the Insurance Information Institute.

Sources

  1. South Carolina Department of Insurance. "Second Home Insurance: What You Need to Know." Accessed April 17, 2023
  2. Federal Emergency Management Agency. "National Flood Insurance Program." Accessed April 17, 2023
  3. Insurance Information Institute. "Coverage for renting out your home." Accessed April 17, 2023
Theresa Stevens
Theresa Stevens

Theresa Stevens is a personal finance writer based in Boston, Massachusetts. Her work has been featured in Forbes Advisor, Bankrate, and more. As a former financial advisor, she has first-hand experience helping people solve their money challenges. When she's not writing, you'll find her trying out new karaoke spots or planning her next trip abroad.

Chris Schafer
Edited byChris SchaferSenior Editor
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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