What Does Second Home Insurance Cover?

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Frequently Asked Questions

What does second home insurance cover?
Do I need second home insurance?
How is second home insurance different from homeowners insurance on my first home?
How do I get second home insurance and how much does it cost?
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What Does Second Home Insurance Cover?

If I buy insurance on my second home, does it cover the same things that are covered by my first home’s insurance?

Second home insurance can work the same way as homeowners insurance on your first home, but it doesn’t always. There are two main options for insuring a second home:

  • Buy a second homeowners insurance policy, with all the coverage of the first, just applied to a second home.
  • Buy what’s called a “dwelling policy,” which covers property damage and theft only, not liability. If you want, you can then extend your liability coverage from your main homeowners insurance to the second home.

If you have three or more homes, it might make sense to create one giant policy that covers all of them. An independent insurance agent can help with that. But for two homes—especially if one is a smaller seasonal home, like a cabin—these are the two most common options.

Which option will make the most sense for you depends on your budget, the type of coverage you’re looking for, and on the size and condition of your homes.

And just as a quick refresher, here are the main things a homeowners insurance policy covers (and where it might differ from a dwelling policy):

  • Physical damage: Covers things like fire, burst pipes and natural disasters that could damage your home and belongings.
  • Theft: Exactly what it sounds like. Covers stolen belongings.
  • Liability: Covers you if you’re sued for something related to your home. If your dog bites someone and they sue, liability coverage would pay for your lawyer and any damages you might owe. This is not covered by a dwelling policy.

Dwelling policies cover physical damage and theft only. They may also cover a more limited range of physical damage scenarios than homeowners insurance. Homeowners insurance typically covers all three areas thoroughly.

Do I Need Second Home Insurance?

My wife and I want to buy a cabin. Will we need insurance on it? Can we just get a regular homeowners policy to cover it?

If you are planning to finance your cabin, then yes, you will almost certainly need second home insurance. That’s because banks want to be sure that you’ll still be able to make mortgage payments even if disaster strikes.

Your lender may require you to have homeowners insurance—which offers more thorough coverage than a dwelling policy—for that reason.

But let’s say you were to pay cash, or inherit a cabin or other second home with no debt, or pay it off entirely on your own. Then it would be your decision whether to insure it. That decision should depend on the value of the cabin and its sentimental value to you.

Think about these questions:

  • Would you want to rebuild the second home if it burned down? Could you afford to pay to rebuild out of pocket?
  • Are you storing anything valuable at the second home that you would want replaced if it was stolen?
  • Are you exposing yourself to a lot of legal liability with your second home? Is it in a neighborhood where there are more people around who could sue you, or in a rural area where people mostly keep to themselves?

Second home insurance is there to help you pay for worst-case scenarios. If they aren’t that bad, and you’d be willing to pay to cover them yourself, then you may choose to skip second home insurance.

How is Second Home Insurance Different From Homeowner's Insurance on My First Home?

Can you explain the differences between having insurance on one home and having insurance on more than one? Is it mostly the same or pretty different?

Insuring a second home is a similar process to insuring your first home, though the exact similarities and differences depend on which option you choose.

If you choose to get a second homeowners insurance policy, the process will be practically identical. You’ll just be paying two premiums a month instead of one. (Though you could get them bundled together for a discount!)

If you get a dwelling policy instead, then you’ll need to make sure you read the fine print about what is and isn’t covered to make sure you get the coverage you need. An independent insurance agent can help. They can also help you through the process of extending the liability coverage from your first home to your second if you want it.

If your second home is in a different state from your first home, then the process might be slightly different due to different insurance regulations in each state. It’s unlikely that it would be a problem, though, and your independent insurance agent can handle that red tape behind the scenes.

The thing that could change this process the most is if you want to insure a bunch of homes, especially if they’re valuable (like mansions). Then you’d want to be sure to work with an independent insurance agent who specializes in working with high-dollar policies.

How Do I Get Second Home Insurance and How Much Does it Cost?

I want to get insurance on my second home when I buy it later this year. What do I need to do? And how much should I expect it to cost?

Your first step is talking to an independent insurance agent. Talk to them about your plans to buy a second home:

  • Where are you thinking of buying a second home? (A lake cabin? A beach house? A second home in a normal residential neighborhood?)
  • Will the second home have full amenities (plumbing, electricity, etc.) or will it be rustic?
  • What is your approximate budget? What will be the value of the second home?
  • What is your current homeowners policy?

They can start shopping around for you right away so that you can get an idea of what second home insurance will cost as soon as possible.

The cost of second home insurance can vary a lot. Your first home is typically worth more than your second home, making insurance for your first home more expensive. But your first home may be located in a safer area that provides discounts, whereas a second home could be in a rural area more prone to natural disasters or fire.

A dwelling policy can be cheaper than regular homeowners insurance, or it can be more expensive, depending on the area and the risks it’s designed to cover.

In other words, it all depends on your unique situation. An independent insurance agent is an expert who can help you evaluate all your options. They can also help you find discounts. You may be able to bundle insurance for your first and second home to get a discount.

Enjoy your new home! Hopefully there will never be a situation where you have to file a claim on your second home insurance, but if disaster strikes, you’ll be glad you took the time to get your insurance sorted out now.

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TrustedChoice.com Article | Reviewed by Paul Martin

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