Having a vacation home is a luxury and often a good investment for your clients. But there are important factors your clients need to consider when it comes to owning a second home. Far too often, homeowners falsely believe they do not need insurance for their vacation home. However, just like their primary residence, it’s imperative to insure their vacation home against burglary, fire, liability, weather damage and the like.
If you’re looking for advice on explaining why vacation insurance is so important to your clients, read on.
A Renter’s Individual Insurance Policy Won’t Cover Damages That Occur On Your Property
If your clients currently rent or plan to rent their vacation home, insurance isn’t a nice-to-have, it’s a must-have. The majority of insurance policies are designed to cover owner-occupied properties or homes that are solely used by the family. Vacation rentals, on the other hand, are typically rented on a nightly, weekly or monthly basis. In situations like this, the standard homeowner’s policy does not cover vacation rental activities. If something goes awry while they are renting their vacation home to guests, it’s important that they don’t assume the guests’ homeowner’s insurance policy will cover the damages.
Detached Structures May Need Additional Coverage
Vacation homes tend to have more bells and whistles than regular homes (think: boat houses, sheds, and other structures that aren’t attached to the home). While in many cases, these detached structures are covered under the policy that protects the home, sometimes there is a limit to the coverage amount. For example, coverage may be limited to 10 percent of the vacation home policy — meaning, if your client’s vacation home is insured for $250,000, then they have $25,000 in coverage for detached structures. While percentages vary from insurer to insurer, this is an often overlooked detail when it comes to vacation home insurance, so be sure to discuss the fine details with them.
Insurance Differs State by State
Oftentimes, vacation homes are far away from a homeowner’s primary residence. It’s important to remember that insurance is regulated at the state level, so be sure to talk with your clients and see which rules apply in their vacation home’s community.
Just because their primary home is in Florida, doesn’t mean their vacation home in Maine will have the same deductibles and overall coverage. In certain cases, a vacation home might not even be eligible for insurance coverage due to high risk for loss due to flooding or other circumstances — so always speak with your clients to ensure their current coverage is exactly what you need.
Learn More About ASI
ASI is one of the largest homeowners insurance carriers in the United States. Through a network of independent agents, the company offers home, condo, renters, dwelling fire, and flood insurance in more than 40 states. Find out more at AmericanStrategic.com.