Insurance and Your Second Home

Sunday, Jul 6, 2008

A second home is not necessarily "home sweet home" when it comes to homeowner's insurance. With house number two, you'll discover the need for more insurance, priced at a higher cost than the premium for house number one. How much higher depends on how closely you follow these money saving tips.

People fortunate enough to own a home away from home often complain about a second residence being more trouble than it's worth-especially when it comes to homeowner's insurance. The increased premium is attributed to the fact that owners don't spend as much time at their second home as they do at the first. In the insurance company's eyes, that leaves the residence more susceptible to burglaries and fires.

Even though that fact is hard to dispute, there still are ways you can save on your insurance bill.

Someone to watch over your home

The thought of having to pay a claim on a burglary scares the wits out of an insurance company. Abate their fears by installing an alarm system in your second residence. It may require some upfront money and an ongoing monitoring fee, but you could save upwards of 20 percent on your insurance bill. You'll save even more if your home is in a gated community.

Consolidate for the rebate

Use the same agent on your second home that you use on your primary residence. You'll generally receive a discount on your policy when you have the same company insure multiple properties. Throw in an umbrella policy and car insurance, and your premium should decrease even further.

Renting out your summer home

When it comes to insuring a summer rental, you can't win. Insurance companies don't like the idea of you leaving your house all by itself, so they'll increase your rates. If you decide to rent it, they don't like that idea either, because tenants tend to mistreat property, or at least don't treat it as well as the real owner would. One way to offset the costs is to require any tenants to supply their own furnishings, thereby reducing the insurance company's liability.

Open the umbrella

In our litigious society, an umbrella policy is a necessity-second home or no second home. These provide a hefty amount of general liability, usually around $1 million, and protect you from all types of lawsuits. Considering your potential risk exposure with a second home-especially one that you rent out-such policy is essential. Contact your agent to determine the proper amount of coverage for your situation.

The ability to retreat to that home away from home is a true blessing for people who own a second residence. However, insurance companies will do their best to spoil the fun. To soften the blow of a higher insurance policy, do what you can to lessen your insurer's risk exposure. Protect your second home like you would your first, and your premiums will reflect your extra effort.

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