How to Adequately Insure Your Vacation Home

Buying a vacation home is exciting and fun. However, it can become a losing investment if it is not covered with NJ Vacation Home Insurance to protect against potential financial losses. For example, if a fire in your vacation home results in a total loss to the structure and possessions inside, your insurance carrier will step in to help you recover and rebuild.

When they purchase a vacation home, some people inaccurately believe that the policy on their primary residence covers the second home. Still, because mortgage lenders require proof of proper insurance, such misunderstandings are soon resolved. However, knowing a typical homeowners insurance policy does not cover vacation property is crucial. For example, your getaway needs another type of homeowners insurance — second home insurance.

Extra Risks for Vacation Homes

Although your vacation home might not be your primary residence, it still needs protection from natural disasters. Homes left unoccupied are at higher risk of vandalizing or having property stolen. You’ll find that some insurers decline to cover second homes because of the additional risks involved, which can cause NJ second home insurance to be more expensive. In tight markets such as we are seeing today, insurers become very selective or leave the market altogether.

When purchasing a condominium or single-family vacation property, it is advisable to research the insurance costs and the associated risks with care. Many factors influence getting an accurate quote and price for a homeowners insurance policy. For example, underwriters consider an applicant’s attributes and macro trends such as current labor and material shortages and the increasing frequency of more potent and damaging weather. Such conditions are why we suggest using independent agents who have access to multiple carriers to shop the best coverage for their NJ Vacation Home Insurance clients.

Must-Know Facts about Seasonal & Vacation Homes

When you research to determine the type of homeowners insurance to carry on your secondary residence, your agent will need to know these details about your vacation home.

Property Location

Is the house near the sea or close to an ocean or tidal river? If so, it may be vulnerable to flooding or high wind speeds, which will need a separate flood insurance policy to protect against these risks. However, for such conditions, it may be prudent and necessary to add an endorsement or different policy for wind damage that is otherwise excluded from your vacation homeowners policy. For example, if your second home is located near a mountain range, it is at risk for wildfire damage, which is also a separate coverage.

Building Condition

The age of your vacation home and the type of construction materials used affect property insurance costs because older buildings tend to be less safe than newer ones. Therefore, insurers need to know if the property is a single-family unit, a unit within an apartment community, or a townhome in a condo development. An example of why multi-unit residences need insurance protection is if they should suffer damage caused by water intrusion into a unit from outside sources.

Condominiums within a condo association also need adequate Loss Assessment insurance. It is coverage to help pay costs should an event occur that causes a special assessment due to accidents or losses in the condominium common areas, which the association’s master policy excludes or does not fully cover,

Occupancy/Vacancy

Properties left unoccupied for extended periods of weeks or months create additional liability concerns. And you need to know that some conditions of your primary residence homeowners policy may affect your vacation home policy. Therefore, a thorough review by your agent is crucial to identify and address such potential problems.

It seems unfair, but it’s possible that burglars or vandals who sustain injuries while breaking into or trespassing on your vacation home property may make a liability claim or bring a lawsuit naming the homeowner as liable for their injuries. Adequate protection against this and similar scenarios is a reason to consider adding extra liability insurance coverage to protect such risks.

What Does a Vacation Home Insurance Policy Include?

Vacation homes aren’t identical to traditional houses for several reasons, but chiefly because they’re not always occupied. As such, your homeowner’s insurance provider may not offer coverage for every possible risk, and your policy may limit protection to specifically named perils (such as a fire) instead.

The most typical coverage for named perils in a homeowner insurance policy includes certain types of losses, including damage caused by:

• Fire and smoke
• Lightning
• Explosions
• Theft, and more varied by carrier and policy

The liability portion of vacation home insurance usually includes liability insurance for personal injury claims made against the property owner. Additionally, it is recommended for the liability policy to include coverage for medical payments to help pay the medical bills if guests are injured while visiting the property. For some homeowners with coverage for their principal residence, their current insurer may offer similar protection at an additional cost for a secondary property.

Understanding the Risks of Renting a Vacation Home

Relaxing from everyday stress at your vacation home makes for memorable times. However, should you decide to rent your property, you must investigate if you need extra liability coverage to protect against any liabilities associated with renting your house.

Short-term rental insurance protects those who rent their vacation home or residence to others for short stays arranged directly or through a service like Airbnb. Having guests unfamiliar with your property, who may party excessively, creates potential risks that require protection for everything from kitchen or fireplace fires, plumbing disasters, stolen property to accidental guest injuries. You might be able to get an endorsement added to an existing policy if you’re renting out your property for less than 30 days at a time.

HOAs and municipalities are banning short-term online rentals. As such, it’s essential to research laws, ordinances, and other regulations limiting or forbidding short-term rentals.

You may need a long-term renters policy for longer terms (a year or greater) that protects your home or condo and property but not the tenant’s property. It’s an excellent suggestion for a landlord to recommend that tenants buy renter’s insurance to cover their potential losses.

Get Peace of Mind Protection

Whether you bought your vacation home as a private retreat or as an investment to rent, you hope for and expect satisfying results. As your local NJ Vacation Home Insurance specialists, we are eager to help you protect your second home and your investment in it by providing comprehensive coverage at competitive rates.

The Dickstein Associates Agency offers more than insurance; we provide tips and insights from decades of experience that help our clients avoid situations and circumstances that only proper insurance coverage can fix. So you need to know we are always here to help you when you need us.

About Dickstein Associates Agency

Dickstein Associates Agency has distinguished itself as a leading provider of personal and business insurance in the tri-state area since 1965. We pride ourselves on being advocates for our clients and providing them with quality and affordable coverages. As Trusted Choice™ independent insurance agency, we partner with various national and regional carriers, allowing for flexible coverage for each client’s unique circumstances. For more information on how you can leverage all your insurance to work best for you, and how we can secure the best insurance in the marketplace suited to your specific needs and business objectives, contact us today at (800) 862-6662 or www.dicksteininsurance.com.