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How to Get Insurance for Your Vacation Home
February 19, 2018
If you are reading this, I bet you own a second home in Orlando, Florida. You also probably have a property management or vacation rental company managing the property for you. Now you, my friend, are living the grand American dream.
However, if you are vacation homeowner, in Orlando, Florida or wherever else, then it is time to consider getting insurance.
Because in the coming summer weeks, many families will be moving into your vacation home for a well-deserved break. Your guests will need adequate insurance protection owing to the fact that during summer the pool is in full use and the grill is always bursting into flames.
Not everyone is perfect and you expect to have cases of fire accidents, drowning or injuries. Expect the worst, even when you have a property management or vacation rental management company looking over your second home in Orlando. Who knows, there could also be property damage.
The fact that you’re not often occupying your vacation home puts it in more danger of vandalism, theft and other undetected damage like burst water/sewer pipes. Due to higher susceptibility to filing a claim, vacation home insurance policies are more expensive than your primary residence cover.
Despite it being costlier, vacation insurance coverage is a must-have. Otherwise, you’d be taking a huge financial risk. Not a suave move, right? Plus, let's be honest, no one wants to be caught up in a lawsuit.
However, you need to be smart and to know what you are going for. Your vacation home insurance will not be the same as your residential home insurance. Underwriters need to consider a lot of things about your property before they give you the insurance policy. Here’s is what to consider when shopping for the best insurance policy:
Qualifications and Cost Factors Considered by Underwriters
1. Property Type
This is a key insurance consideration in any residential property. The age and type of building will determine whether it is worth insuring or not. Obviously, an old building that is bordering condemnation will be hard to insure. However, if there is proof that it is well maintained by a property management or vacation rental management company then its value may just go up.
The size of the house will determine the cost of the insurance. A townhouse, double occupancy house, a condominium or a villa will have different costs. Take for example a stand-alone chalet in Orlando, it will definitely have a higher insurance cost than a single occupancy house.
In property management, it cannot be echoed enough how location determines the value of a property. For vacation homes in particular, if it is located in a desirable off the top area, then it may be quite costly to insure. For example, if you have a cabin that is on a remote mountainous area, that may cost you a few more bucks to ensure due to the danger of your guests getting mauled by wild animals.
On the other hand, if you have a beach house in Coastal Orlando, Florida, it may be hard to get coverage due to the risk of coastal storms. That is why most vacation homeowners in Orlando go for an insurer of last resort for a high-risk home insurance plan. At least there is a guarantee of insurance coverage there.
The amenities that you provide to you guest to boost their vacation experience may increase risk in your property. Things like bathtubs or pools add a risk of drowning. Yikes!
That aside, the contents of your house are prone to theft, fire, damage etc. That means that the insurer will demand higher premiums from you to cover such issues.
What Kind of Policy Should I Get for My Vacation Home?
Identifying the needs of your vacation home is the first place to get you started. Talk to your insurance agent. They will certainly help you get the right policy for your vacation business. Most insurance companies typically cover the following for vacation rental property:
Contents and structure: You will get reimbursed for the building and all its contents that were lost in the event of the risk.
Liabilities:- This covers personal injuries to your guests or other people staying at your residence.
Lost Income:- You get compensated for the income lost during the time you were not receiving any money due to the dormancy of your damaged property.
Dwelling Coverage:- This is the part of your policy that comes in to pay for rebuild or repair your home in case plumbing, HVAC system, or electrical wiring damages.
Named peril coverage:- This typically covers perils like winds, fires, lightning, wind, and hail that is common in Orlando.
You can also get additional policies if your property is in high-risk areas for earthquakes or storms like in coastal Orlando. Before settling on your insurance provider, be sure to compare the different policies offered by the different insurance agents online.
If you’ve already identified your insurance provider, it is important to understand where they fall businesswise. There are two dominant types of insurance underwriters. Does it matter? Yes, it does! Here’s a highlight on the major players and what to look out when shopping for your property’s policy?
Types of Insurance Underwiters
1. Direct Writer/ Captive
Now, this is the famous insurance providers that have a brand name working behind them. They only sell for that specific company. You will get the all direct services the company offers like telephoning, local offices in numerous locations and an internet presence.
The upside of working with them is that they have a vast knowledge of the insurance policies that you could take and can advise you accordingly. The downside is that the insurance agent is always subject to the policies of the insurance company and is, therefore, not competitive.
2. Independent Insurance Agent
This is a privately-owned insurance business that sells policies with numerous insurance companies. You may hear them being colloquially referred to as brokers. The brokers can work individually or with corporations of numerous members. They represent you, the client, to the carrier, the insurance company.
The downside of independent insurance agents is that they run many small businesses with limited resources. You may find yourself outsourcing some services.
What to Look Out for When Shopping for A Policy
Although the cost of the insurance for your vacation home is a huge factor to consider, you do not want to insure with a whacky home insurance provider. Obviously, there are other factors to consider when picking your insurance provider. And these factors should be indicative of the quality of service you will get and also help you get value for your money.
Here’s is what to consider before you seal that deal:
• Claims processing: How fast do they make payouts when a claim is filed?
• Coverage options: Do they have the capacity to cover your vacation homes needs?
• Financial stability: Do they have a financial muscle? Do they have adequate experience in vacation home coverage?
• Customer service: Is your first-engagement experience good? How do other clients review them online?
Tips on How to Save On Vacation Home Insurance Costs
All reputable insurance companies offer a variety of discount and cost-cutting options to their clients. Here are a few ways to bring down the cost of your insurance considerably:
• Protective Device Discount - Minimize the risks on your vacation homes
If you are looking to invest in a vacation home in Orlando you will face risks such as destruction from severe weather, theft and occasional interior/ exterior damages due to the constant influx of new vacationers.
You can enjoy a protective discount and bring down your premiums by having superior security systems, fire alarms, sprinkler systems, or other security devices. Also, choosing an area away from the coastline – if you’re buying in Gulf Coast– will bring down your insurance premiums considerably.
• Bundle your policies to get a Multiple-Policy Discount
Insuring your vacation home with your primary residence, or auto insurer will certainly bring down the cost of your insurance.
• Install a superb alarm and security system
Installing a centrally monitored system that detects both break-ins and fire outbreaks will help bring down your premiums.
• Get a claim-free discount
If you haven’t made a claim to your insurance provider over a certain period of time, you can enjoy a cheaper insurance policy.
• Newly Purchased Home
If you’ve recently purchased your vacation home, certain insurance providers will give you a considerable discount on your first policy.
• Early Shopper Benefits
Be sure to request a quote with your provider before your current policy expires. This will help you get an early shoppers discount.
• Insure to value
If you’ve insured you vacation home up to 100% of its value, you are guaranteed to get a discount with most insurance providers.
• Shop around for the best
By getting several quotes from different insurance providers, you will certainly better rates every time you renew your policy.
Depending on the state that you are property is in, you may be legally bound to provide insurance to your guests. Your property management or vacation rental management company probably advised you on that. Do not think even for a minute that you won’t need it since you do not stay there all year round.