How to Obtain Homeowners Insurance on a Second Home

Second homes are a popular real estate investment. According to the National Association of Realtors, 543,000 second homes were sold in 2010. Whether they are vacation homes or turned into rental homes, second homes need good homeowners insurance coverage in case of unforeseen problems. Consider a few factors and do your research to get the best homeowners insurance.

Instructions

1. Check your primary homeowners insurance policy for coverage. You may be able to extend the insurance on your first home to the second home depending on your policy. Carefully read the policy so you understand how it can protect a second home. Call your insurance agent if the policy is not clear.

2. Make an inventory list. Create an inventory list of household items so your insurance company knows exactly which valuables it is covering. The National Association of Insurance Commissioners recommends updating the inventory list every year so it’s current. The list will make it easier to file a claim since you already know what’s in the house.

3. Understand of the different terms for secondary home insurance. Homeowners insurance for secondary homes often covers only specific events or "named perils" -- common ones include guests injuring themselves in the house, theft and explosions. Liability coverage protects you in case of a lawsuit, and it’s especially important if you think you may rent the home out to others in the future. Some insurance companies have different plans depending on how the house will be used. Ask your insurance agent how policies differ if the home is going to be used as a vacation home or rental property.

4. Lower the potential cost of homeowners insurance coverage. There are a few things you can do to decrease the future insurance costs. Bank of America recommends placing an alarm system in the home or owning a second home in a rural area to decrease your costs. These safety measures will be taken into consideration when applying for insurance.

5. Fill out an application. Once you’ve narrowed down possible policies, apply by providing the insurance companies with basic information like your name, previous addresses and credit history. Companies have different application forms and processes, so make sure you follow all their instructions.

Tips & Warnings

• Proofread your insurance application before turning it in.

References

• National Association of Realtors; Vacation- and Investment-Home Shares Hold Even in 2010; March 30, 2011
• National Association of Insurance Commissioners: Protecting Your Summer Investment
• "The New York Times" Newspaper; Insuring Second Homes; Amy Gunderson; August 15, 2007
• Bank of America: Protecting Your Second Home
• Insure.com: Home Insurance Basics

Resources

• Mortgage Match; Vacation Home Sales Buoyant: 10 Hot Spots; Mary Umberger; April 5, 2011
• "The New York Times" Newspaper; Lowering the Cost of Home Insurance; Amy Gunderson; July 25, 2007