UPDATED: Jan 25, 2019
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Your second home, whether it’s a chalet in the mountains or a beachfront cottage, has different insurance needs from the place where you primarily rest your head. There are some important things to consider before you choose a policy – and an insurance company.
A second home is frequently vacant, and it may not contain as much of your personal property as what is kept in your primary residence. These things, among several others, impact the coverage you need as well as what you can expect from your insurance company.
The Basics of Home Insurance for Second Homes
In some ways, insurance for a second home is similar to that on your primary home; you still need coverage for the house and other structures on the property, liability coverage, and some personal property covered. Those basic building blocks of a home insurance policy are the same, but the way the coverage is handled may be different.
If you have a loan on your second home, you will be required to provide a policy that meets the guidelines provided by the lender. Usually, that requires that the policy provide enough coverage for the structure to replace it if it were to burn to the ground. If you own the home outright, you likely will not have any requirements, but will still want to protect your investment.
Second homes are considered riskier for insurance companies than a primary home, and that is largely due to the fact that they are frequently vacant. A burst pipe in a primary home will be noticed immediately, but in a home that is empty for weeks or months at a time, serious damage can take place before it’s caught. The same applies to homes that are remote – it may take much longer for help to arrive in the event of a fire, which means more damage. As a result, insurance companies rate these homes differently.
Specifics of Home Insurance for Second Homes
Beyond the basics of insuring any home, second homes may have a few specific requirements.
Flood insurance may be needed – even required – if you live in a flood zone. This is a separate policy that is purchased independently of your main home insurance policy, rather than an endorsement. If you live near a body of water, you will want this coverage even if it is not required.
Some insurance companies will not insure your second home unless you have a primary residence insured with them; be sure to check on this before you get a quote. You may be eligible for a multi-policy discount as well if you insure with the same company.
When it comes to coverage, many insurance companies protect second homes differently. Because of the increased risk presented by these properties, policies are often on a named perils basis. That means that you are only covered for the perils (fire, weather, water damage, etc.) that are specifically listed on your policy. It is an important difference to note, and while you would not usually take such a policy on a primary home, it may be your only choice on your second home.
Some companies will also try to insure a second home on an actual cash value basis rather than replacement cost. This is something to avoid as much as possible because it does not usually provide adequate coverage; the insurance company can pay you the depreciated value of your home rather than what it actually costs to replace it. Replacement cost on a second home might be harder to find, but it’s worth the search.
When it comes to liability, you may have the option of extending coverage from your primary homeowner’s policy. Check with your current insurer on that but bear in mind that most package insurance policies include liability standard.
The first thing we looked for was the best overall coverage. All of our top picks offer replacement cost coverage on your second home, and not only actual cash value. We looked for companies that offer great value on the policy, including lots of optional endorsements and available discounts.
Choosing a company that has a good reputation for paying their claims is also a major factor, so all of the insurers we chose, meet our standards.
While we generally recommend insuring your second home with the same company as your primary, we did look for companies where that is not a requirement, since it’s not always possible. We also selected companies whose products are widely available.
Our Top Recommendations
These three companies provide quality second home insurance with the backing of a good, solid company.
Foremost is a part of Farmers Insurance Group, and generally handles their higher-risk and specialty properties. That includes second homes. Thanks to the partnership though, you can get multi-policy discounts across companies – although you are not required to insure your primary residence with either Farmers or Foremost.
Foremost offers the option of a replacement cost policy on their second home products, including extended replacement cost of 25% above the calculated amount. The company has also got plenty of other options to add. As part of one of the biggest insurance groups in the country, they have a solid financial footing.
American Modern is a specialty insurer and often the partner of choice for major insurance companies when a customer needs a coverage they do not provide. In the realm of specialty insurance companies, they are among the best and most popular.
Their second home policies include replacement cost coverage for homes that qualify, along with a list of other coverage options that create a comprehensive policy. They can also insure lower value and higher risk vacation homes.
State Farm is your best bet if you are looking to insure both of your homes in one place and prefer to have both policies with a standard insurer. State Farm’s requirements are more stringent than a specialty insurer, so if your second home is more rustic you might want to consider our other choices.
State Farm is the nation’s most popular home insurance company and has a good reputation, so you can feel confident they’ll take care of your home. They also have plenty of multi-policy discounts available.
Shopping for Second Home Insurance
The first place to start when shopping for insurance for your second home is the company that insures your primary residence. A lot of companies that will not insure a second home individually will be willing to work with you if you’ve already got other lines of business in force; the more policies you have with that company, the more likely they are to help you. In some cases, you might be able to get dwelling coverage for the second home and extend the liability from your primary residence.
As you are shopping around, make sure to ask questions about the coverage. While you’re unlikely to find a policy that is an all perils versus named perils, it is definitely possible to get replacement cost coverage in most cases. Unless you have a second home that will not qualify for replacement cost anywhere (very old, rustic, or in need of renovations), you should not let an insurance company talk you into an actual cash value policy. At claim time you will be glad you stood your ground.
Second home insurance can be expensive due to the higher risk level. It may take more shopping around and comparing to find the right value in your policy. It is always a good idea to ask neighbors at the second property which company insures them; you may find that there’s even a local company specializing in that area.
The Bottom Line
Second home insurance can be expensive and harder to obtain than that for your primary residence, but there are some great products out there designed specifically for the risks of your little piece of paradise. Make sure you’re getting the coverage you need and not just the least expensive option so that you can enjoy your second home without worrying about it when you aren’t there.
For a list of companies that we recommend, visit our Best Insurance Companies page.