Minimize the Cost of Insuring Your Vacation Home - YA
In Florida alone, there are nearly half a million vacation homes, which account for over 15% of the state's housing stock. Maricopa county in Arizona has over 113,000 vacation properties. Vacation homes are more common in 2020.
Before you purchase a secondary home, it is important to factor in the cost of insuring your getaway house. Most people don’t realize that insurance companies view second homes as inherently “riskier” than your primary residences. This is because unoccupied homes are more likely to become the target of a burglary or vandalism.
This leads to carriers charging ~20% more for coverage on a secondary property. You may be thinking, what if I just tell them it is my primary home.
If you are not honest on your upfront application and go to file a claim, the insurance company will likely deny your claim and cancel your policy, leaving you on the hook for the 100% of the damage.
So what do the ~3.6 million vacation homeowners in the US do - just pay the higher cost? Not necessarily, there are ways to structure your coverage and remove unnecessarily add-ons to bring down the cost.
Add a Security System
Installing a security system in your vacation home is even more important than your primary home. The security system is most effective when you are away from home. Having a security system means less claims being filed, which gets you lower premiums.
Hire Someone to Maintain/Visit the Property
It could be a grounds crew, property management company, or just a trusty neighbor, but demonstrating to your insurance carrier that someone is making regular visits lowers your property’s risk factor, and in turn your premium. Saves you money, stress, and anxiety.
Renting Out Your Vacation Home
More homeowners are using AirBnB to keep their vacation property affordable. As of 2019, the US vacation rental industry had revenue of nearly $15 billion. While this is an excellent strategy for making passive income while also paying your property’s mortgage, it opens a whole new insurance conversation about short term rental/AirBnB insurance. Don't assume a normal insurance policy will cover damages if you are doing short-term rentals.
At your service,