Does Homeowners Insurance Cover a Second or Vacation Home in 2022?
If you are trying to determine if the insurance policy on your primary residence will also cover a second home, by the end of this article, you will be an expert on how that works and your options.
Insurance on your second home.
The term “second home” is the same as “camp” or “cottage” in different parts of Central New York. From an insurance perspective, they can be very different types of properties. Regardless of the term one uses, your primary residence homeowner’s policy will not cover the second property.
You will need a separate policy for this property, and although it will act and behave similarly to your primary residence homeowner’s policy, they are not identical. To learn more about how a primary residence insurance policy works, read the article “What Does My Homeowners Insurance Cover?”
The fact that this property is not your primary residence means the insurance policy for this property will indicate this is a second home. Since not all second homes are created equal, let’s review what some of the essential differences are.
The insurance company will ask about the property and features it may have to determine if the property would be considered a year-round home (which can still be a second home). Does it have a heating system? Is there running water inside the home or an outside well with a hand pump?
The answers to these questions will determine how the insurance policy provides coverage. As we review this topic further, please keep in mind that there is a difference between the types of events covered by a policy and the dollar amount of coverage provided.
Different types of second homes.
As mentioned above, there can be a wide variety of second homes. The more your second home resembles a year-round residence, the more it will resemble the standard homeowner’s policy. If your second home is more like a hunting camp, fewer types of events will be included in the policy.
For example, a home on Cazenovia Lake or Oneida Lake here in Central New York may be used as a year-round residence. If the home has a furnace and internal plumbing and is right down the road from a fire station, then many events will be covered by the policy, similar to your primary residence.
However, because you do not live there year-round, the insurance company is aware of a higher level of risk for providing a policy. If your furnace stops working at your primary residence in February during a cold snap, there is a good chance you will know the heat is off the same day the heat stops working.
You come home at the end of the day and can tell there is no heat. You contact a heating company, and the problem does not last long enough to cause your water pipes in the house to freeze. Since you are not at your second home as often, the speed at which a heating problem is recognized will be much slower.
This increases the likelihood that if the heat goes out, frozen pipes will cause damage. The insurance company will still be willing to provide coverage, but at a higher cost than if you lived there all year.
What if you only use the property from late spring until early fall because it is a bit more rustic and does not have a furnace? You probably winterize the home in the fall and then open everything in the spring. This is not an unusual scenario here in Central New York.
This also means you will not be visiting the property for weeks and probably months at a time. You reduced the likelihood of water lines breaking by winterizing, but there are other risks that the insurance company keeps in mind.
Because no one is there for long periods, the chances of vandalism can be higher. If you are not there as often, your second home is at a higher risk of being broken into and having personal property stolen.
Is your second home very remote?
You may find being far removed from population centers very relaxing so you can avoid the hustle and bustle of daily life. Your nearest neighbor may be a mile down the road, and you enjoy the seclusion.
That can be very good for your relaxation, but being remote may make it difficult for the fire department to find the property, and that will increase the risk to the insurance company. Similarly, your second home may be easy to find, but it is set back from the road on a very long dirt driveway.
If that driveway is not plowed because you will not be there for the winter months, the challenge is getting up the driveway, even when the fire department knows precisely where the property and driveway are located.
These are factors that can increase the amount of damage a fire can cause. Either because the fire trucks cannot find you, or cannot get up the unplowed driveway, or both. This can increase the cost of the policy as well.
What if you have a “hunting camp”?
This term has a wide variety of meanings, and beauty is in the eye of the beholder. For this conversation, imagine a structure built with no foundation, no furnace, and a hand pump for water from a well. It has four walls with a floor, a roof, and not much else.
There is a wood fireplace for heat and an outhouse out back for “roughing it.” Can you get coverage for this second home? You can more than likely, although not every insurance company is willing to provide a policy.
Will the coverage be the same?
Earlier, we mentioned two different components when trying to obtain coverage on a second home. There will be variations from one insurance company to the next, so it is essential to review the level of coverage each company may provide when purchasing a policy. That also means it is impossible to tell you that if your property has “these” characteristics, it will qualify for “this” level of coverage.
One insurance company may not like a property outside two miles from a firehouse, and another may have a file mile comfort zone. One company may only be comfortable with year-round properties, and another may be interested in any structure with a roof.
The following three sections will explain options you will find from most insurance companies. Depending on the insurance company, there will be tweaks, modifications, and adjustments, which is why you need to be diligent in reviewing the details.
Second home coverage with minimal coverage (also called “dwelling fire”)
Regarding the structure, the more comfortable an insurance company is with a property, the more potential events they will insure. For example, the company may only be willing to provide insurance for particular events for a rustic hunting camp.
The basic dwelling fire policy will specifically name the events that qualify for coverage: fire, lighting strikes (which can cause fires), and internal explosions (think of a gas stove blowing up). Nothing else would be covered.
A dwelling fire policy can be purchased with various levels of coverage for the above events. Sometimes the value of repairs is calculated using an actual cash value formula. That means if a porch was worth $1,000 the day before it burned, that is how much the insurance company will pay.
The policy can usually be purchased so that the value of repairs is calculated using the cost of replacement. For the same porch mentioned in the previous paragraph, if the cost to replace the porch destroyed in a fire is $3,000 that is what the insurance company will pay.
This policy will not include liability coverage, so if someone trips and falls, you may not have any coverage. Depending on the insurance company, it is possible they will allow you to add liability coverage for a higher cost. Here is why you should consider this coverage.
If you have insurance on your primary residence, you probably have liability coverage included in your homeowner’s policy. That liability coverage follows you almost everywhere you travel around the world. But there is an exception, and one of those exceptions is the coverage does NOT extend to other property you own which has a structure.
Your second home, regardless if it’s a four season retreat or a hunting camp, qualifies as property with a structure. If someone falls on your land, your homeowner’s policy will not cover you. Therefore you need to include that coverage in your policy.
Personal property would only be covered for the same fire, lightning, and explosion events, and only using the actual cash value method.
Dwelling fire is a very basic and watered-down insurance policy; the only time this would be purchased is when there is no other option. It falls into the category of “it’s better than nothing.” You may be given the chance to upgrade the policy to replacement cost valuation method (which costs more) from the cash value method. But sometimes, the insurance company may not offer that option depending on the type of second home, location, proximity to a fire department, etc.
Second home coverage with named events
For a second home that is closer to a potential year-round residence, a company might be willing to insure the property for additional items like damage from hail, high winds, frozen pipes, vandalism, or roof collapse from the weight of ice and snow. The list of covered events is much longer than the dwelling fire policy, but it still spells out the specific events that will be covered.
With this policy, the insurance company is aware it’s a second home and will pay for repairs or replacement of damage to the structure using the replacement cost valuation. In the previous section, that was described using the replacement cost of $3,000 for the porch that burned down.
In addition, the policy will cover personal belongings like furniture and clothing, which were not covered in the dwelling fire policy. Unlike the structure, the personal belongings will be calculated using the value before the covered event. But some companies may allow you to “upgrade” the valuation method to replacement cost for an increase in cost.
Liability protection is included with the policy, typically starting at one hundred thousand with the option to add more. It is typically inexpensive to add more liability, making this something everyone should consider.
Second home coverage with excluded events.
This policy is very similar to the last type buts provides more flexibility for you as the property owner. The personal property is automatically replacement cost, and the structure coverage is also. Liability protection is included in this policy.
The significant difference between this policy and the previous section is how covered events are described. The previous policy type listed the covered events; this type covers everything unless it is expressly excluded from coverage.
This exclusionary coverage also applies to your personal belongings which benefits you as the property owner. Information regarding events that will be excluded can be found in “How to get homeowners insurance.”
Taking the next step to insure your second home.
You’ve now become more enlightened on how second homes are insured. Your house is unique, and how you insure it should be well thought out. Those considerations are critical, and we are here to help.
If you’re ready to discuss coverage options and prices, tap the Get a Quote button below. However, if you’re not quite to that point but have more questions, complete the brief form below. Either way, one of our insurance pros will be in touch with you ASAP.