Insurance for vacation homes: costs and considerations

Do I need vacation home insurance?

You will need a separate home insurance policy for your vacation home. While it might look similar to the insurance policy for your primary residence, other factors, like location and coverage needs, will inform the exact policy you need.

For example, if you own a vacation home near the beach or on a lake, your home may be vulnerable to flood damage. Purchasing a separate flood insurance policy may protect your finances if a flood causes extensive damage to your home or property. If you own a home in an area where earthquakes are common, getting earthquake insurance may be beneficial. Keep in mind that purchasing supplemental policies or raising coverage amounts could impact your premium.

Your second home may also be subject to special insurance considerations if it is unoccupied for an extended period of time or if you plan to rent it out when you aren’t using it personally. Experts recommend speaking with an insurance agent to secure a policy that suits your situation.

Average cost of second home insurance

The average cost of second home insurance will depend on a variety of characteristics specific to the home and homeowner, as well as the coverage selected. For reference, the national average annual premium for home insurance is $2,230 for a policy with $300,000 in dwelling coverage.

However, when you apply for a policy, the insurance company will consider factors like the location of the home, the condition of the home, the type of home and your claims history (among other things) to calculate your premium. Your credit history and ZIP code may also be used to determine how much you pay, although some states ban the use of these rating factors. As with standard home insurance, the types and amounts of coverage you select and your deductible will also impact your premium.

Home insurance premiums by state

The cost of insurance for a second home varies in each state. Knowing how much a primary home insurance policy costs may help you budget for vacation home insurance or inform where you decide to purchase a property.

The table below includes the average annual cost of homeowners insurance in all 50 states for $300,000 in dwelling coverage, per Quadrant Information Services.

What does secondary home insurance cover?

Secondary home insurance and standard home insurance typically include similar coverage types, but the type of home insurance policy you buy for your second home will likely depend on the home’s characteristics and your coverage needs. If you are purchasing an HO-3 policy for your vacation home, here is a brief overview of what home insurance typically covers:

• Dwelling coverage: This provides coverage for the physical structure of your home to repair or rebuild it following a covered peril.
• Other structures coverage: This coverage helps pay for repairs or replacements if your detached garage, fence, shed or other detached structure is damaged in a covered event.
• Personal property coverage: Personal property coverage helps pay to replace your personal belongings, such as clothing, furniture and appliances, if they are damaged or destroyed by a covered peril.
• Loss of use coverage: Loss of use coverage, also called additional living expenses coverage, may help pay for hotel bills, parking fees, restaurant meals, laundry and other expenses if your home is damaged in a covered event and you have to temporarily relocate.
• Personal liability coverage: Personal liability coverage helps pay if someone gets injured at your home and you are found at fault or if you cause damage to someone else’s property.
• Medical payments coverage: Medical payments coverage is designed to cover the cost of a guest’s medical bills if they get injured on your property, regardless of liability.

Other coverage types to consider

While home insurance may financially protect you from a variety of potential perils, second home insurance does not cover everything. In fact, certain losses, including floods and earthquakes, are explicitly excluded from most standard primary and secondary home insurance policies. As a result, you might need to purchase additional coverage.

If it is available and your home qualifies, you may also want to ask about replacement cost coverage for your home and personal belongings. With replacement cost, you would receive the full cost to replace your destroyed belongings or home, rather than an amount with depreciation factored in.

Ways to save on holiday home insurance

Seasonal home insurance may be pricey depending on where you live and what type of home you own. However, there are ways you might save money on your policy. Here are some suggestions that may help you get cheap homeowners insurance:

• Get multiple quotes: Before choosing an insurance provider, you may want to shop around and get homeowners insurance quotes from several carriers to see which provider offers the lowest rate for the coverage you need.
• Bundle home insurance with other insurance products: If your home insurance company also offers vacation property insurance, you may be able to qualify for extra savings on both policies if you choose to insure both properties with the same carrier. This discount may also apply to auto insurance bundles.
• Look for discounts: A majority of property insurance companies offer discounts that may help you save money on your policy. As you are shopping around, consider looking for providers that have discounts you can qualify for, like being claims-free or purchasing a policy online. As vacation homes are sometimes targeted by thieves, installing security systems or subscribing to a 24-hour monitoring service might qualify you for discounts.

What insurance do I need if I rent out my vacation home?

Many people choose to rent out their vacation home to make some extra income while they are staying at their primary residence. However, keep in mind that renting out your home on platforms like Airbnb will likely have additional insurance requirements.

Usually, the best thing to do is talk to your insurance company. You may need to purchase a short-term or long-term rental insurance policy to cover any potential gaps in coverage, depending on how long the property is rented. You might be able to add an endorsement to your policy to cover your property as a vacation rental, but you could need a standalone rental property insurance policy.

Frequently asked questions

Methodology

Bankrate utilizes Quadrant Information Services to analyze July 2024 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on married male and female homeowners with a clean claim history, good credit and the following coverage limits:

• Coverage A, Dwelling: $300,000
• Coverage B, Other Structures: $30,000
• Coverage C, Personal Property: $150,000
• Coverage D, Loss of Use: $60,000
• Coverage E, Liability: $500,000
• Coverage F, Medical Payments: $1,000

The homeowners also have a $1,000 deductible, a $500 hail deductible and a 2 percent hurricane deductible (or the next closest deductible amounts that are available) where separate deductibles apply.

These are sample rates and should be used for comparative purposes only. Your quotes will differ.