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Own Vacation Property? Make Sure You’re Insured Properly

If you own a vacation property, you’re very lucky indeed! Having a place to call your own in the mountains, by a lake, or in another city can be a real piece of paradise for you and your family. But with  a vacation property comes a whole new set of risks that you need insurance to cover. In this article, we’ll cover key questions we will ask you about your vacation property and where show you where the coverage gaps are.

How Do You Use Your Second Property?

For some, a vacation home is only used by the family. For others, it presents an opportunity to earn a second stream of income. How you use your vacation property will dictate what type of insurance you’ll ultimately need.

In the case of a vacation rental property, they will ask how long your rental season is. You need to answer these questions because insurance providers consider properties that you occupy for longer durations of the year to be less risky than ones that are constantly rented out for short periods of time.

You’ll typically get an option to list your home as a secondary property on your home insurance. Depending on the underwriting guidelines of an insurance company, you could also get a completely separate policy for the vacation home depending on your situation.

Insurance Options

As we mentioned, insurance providers consider short term rentals to be of higher risk than longer term rentals. In many instances, you’ll need recreational property insurance which usually has a named perils policy rather than a comprehensive policy.

Named perils policies cover specific risks like smoke damage, fire, or storm damage. It can be more difficult to get coverage for vandalism or water damage if you don’t live there a majority of the year. That’s because the damage might not be discovered quickly resulting in more extensive damage.

The majority of vacation home policies will not cover things like septic backup, flooding, earthquakes etc.

Even if you purchased a low-value vacation home with the intention of fixing it up, you will still need proper building insurance coverage including liability coverage.  This coverage will protect you against claims for bodily injury and property damage from third parties that occur on your property due to your negligence.

Optional Coverage

Depending on the policy you can get, you might need additional coverage to fully cover everything at your vacation home.

Some policies will automatically cover the contents in your vacation home up to a certain limit. It includes everything that stays in your second home permanently. If you need a higher limit, talk to us about additional coverage.

If you have several detached structures on your vacation property like a boathouse or garage, your policy will likely cover it up to a certain limit. If you believe the coverage is not enough, you can purchase higher limits of coverage.

In many cases, watercraft will need to be on a separate recreational property policy which  includes a liability limit for boats and canoes.

Your vacation home is just as important as your primary home. That’s why you need the most comprehensive insurance for it you can get.

About the Author

Kristopher P. graduated with a Bachelor’s in finance at the University of Calgary.  He has over 10 years of experience in the insurance industry as an agent/broker.  He enjoys spending his free time with his family by going to hockey games and camping.  If you’d like to contact him, you can do so at his LinkedIn.