Second Home - Second Home Insurance Tips

You know that a mortgage on a second home will cost you more. But did you know that your insurance will cost you more? It's because you aren't there as much. Here are several ways you can cut your second-home insurance costs.

Alarm Systems

Installing a central alarm system that will detect both fires and burglaries can cut up to 20% off of your insurance premiums. A basic system will cost you around $300 to install and $70 for service each year.

Watchful eyes

If your home is in a gated community you could receive up to a 10% discount on your premium. If you are in a rural area and live near a lake, stream or other water source, you could save 25%. You won't get a discount for having a caretaker, but it will help convince the insurance company that you are less of a risk.

Combining your policies

You will usually save money by insuring your second home through the company that insures your primary residence. This can save you up to 10%. If you can get one of the package policies that cover more than one home, your cars and umbrella liability coverage, you could save even more.

Condo Issues

If you are buying a condo, your condo association should provide insurance coverage for the structure of your home. That cost is included in your monthly maintenance fees. But you are responsible for coverage on your fixtures, appliances, belongings and liability.

Umbrella Insurance Policies

If you don't already have an umbrella liability policy, the purchase of your second home indicates that you probably need to have one. The umbrella policy extends the liability limits to your homeowners, auto and boat insurance policies. If you have two homes, you need at least $1 million in coverage. This will cost you around $300 a year. If you are a landlord, you must have coverage because you have greater exposure to liability issues.

Landlords' Insurance

If you are renting out your vacation home, you will pay 20% more in second-home insurance premiums. That is because you aren't there very much and the insurer recognizes an increased risk. They will argue that the renters will not take the same care with the property that you would. If you are planning to rent your home out, make sure that your insurance knows. Some insurers may charge you less based on the fact that someone is there to watch for fires and burglars. An occupied house has less risk.

Most second-home owners rent out their homes fully furnished. If you decide to rent empty, make sure the insurer knows this, it will cut your need for contents coverage. If your tenant brings their own belongings, they must have their own insurance for them. He can't claim any losses under your policy. It is a good idea to require long-term tenants to carry renter's insurance.