Contrasting First and Second Home Insurance Coverage Decisions

Premiums for second home insurance are usually much higher than premiums for a primary residence. Be aware of the reasons insurers usually charge more for such a policy and of ways to reduce the cost of this insurance.

The Difference in a Second Home

One of the biggest reasons that companies tend to charge much higher homeowner's insurance premiums on a second home is that no one is usually there. Most second homes are used as vacation homes or used only on occasion; therefore, insurance companies are exposed to greater risk of claims for losses due to theft or vandalism.

In addition, there may be greater risk for fire damage that is caused by a gas leak, an appliance that is not turned off or other things that may go unnoticed for weeks or even months at a time. Because the house is usually left unattended, insurance companies charge more to safeguard the building and its contents.

Furthermore, many second home insurance policies will call for lower limits than on typical primary residence policies. For example, unless you purchase additional personal contents coverage, most standard homeowner’s policies on a second home are very limited in the amounts of personal property they will insure. Again, this is due to the fact that the personal property in the home is usually left unattended and may be easier to steal during a burglary. In addition, liability limits for second home insurance policies can be somewhat lower than for primary residence policies.

How to Improve Second Home Coverage

Obviously, you can purchase higher policy limits with any type of insurance policy coverage. However, this always results in higher premium costs. One effective way to obtain sufficient policy limits while maintaining a reasonable premium is by using the same insurance company as you do for insuring your primary residence.

Most insurance companies offer policyholders fairly substantial discounts for buying multiple policies from them. For example, if you have homeowner's insurance on two homes, your insurance company may offer you up to a 20 percent discount on both policies.

Another way to reduce the expense of your insurance is to install good security systems and make sure that they are always in operation when you're not using the residence. Finally, you can reduce your policy cost for a second residence by renting the home to someone if you know you’re not going to be using it for an extended time.


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