Sheri and I went backpacking in Colorado last week for our vacation. It was wonderful to get out of the 100 degree temps in Dallas and enjoy some milder weather, the mountain views, and the challenge of breathing while lugging a pack up a 13,000 foot pass. Before, and after, our two person tent became our abode for three nights, we stayed in a condo. Like many condos in Colorado’s ski areas, this one is a family’s second home, and it led me to think about home insurance for second homes.
Is a home insurance policy for a second home any different than the policy we write on a primary home? That depends on three things, the type of home it is, who’s living in it, and its use.
Second Home Type: Texans have several different types of second homes. There are lake houses, homes in the Hill Country, beach homes, and hunting cabins or mobile homes. I’ve even written condo’s in Austin and homes in College Station that were purchased as housing for students attending the University of Texas or Texas A&M University.
In each of these cases, the type of insurance policy was largely determined by the type of home. If the home were a single family home or cabin, then a second home policy is written for the home. If it was a condo or mobile home, then a condo or mobile home policy is written. Most insurance companies will write an insurance policy on a second home, although some, not all, will only do so if they’ve written a policy on the family’s primary home too.
Who Lives in the Home: The second influencing factor I review with the home owner is who will live in the second home. If the home is occupied by the family itself, as in the case of the family going to a lake house for weekends then a second home policy is written. The same usually applies when the home is occupied by an immediate family member as in the case of a son or daughter living in a condo or home near the school they attend.
I have worked with several people who’ve purchased a home for their parents to live in near them. In these cases, some insurance companies will allow a second family home policy to be written while others do not. For those that don’t, they require the policy be a rental property insurance policy.
Home Use: Sheri and I did not know the owners of the condo we stayed in. We contacted a management company and paid for the nights we stayed in the home. In cases where the family owns a home, but rents it to other people when they are not using it, the home’s primary use has shifted from being a second home to being an investment property. Such a shift impacts the insurance; a second home policy is not written, a rental property policy is written.
The condo we stayed in was furnished with furniture, dishes, cookware, appliances and linens. Most rental property policies are only concerned with replacing the home structure and carry little, if any, coverage on its contents, so be sure to add coverage for these items. In addition, I recommend carrying higher limits of personal liability coverage, as well as an umbrella policy.
Do you own, or are you thinking of owning a second home? Share your questions, comments, and advice with us in the comments section of our blog, or on our Facebook and Google + pages. I’d love to hear from you!