The Cost of Vacation Home Insurance: Shopping Smart

Buying a vacation home is a big financial step, and the last thing you probably want to think about is adding on one more expensive bill. Luckily, vacation home insurance doesn’t have to be expensive. There are plenty of discounts available for savvy shoppers.

This guide will help you understand the cost of vacation home insurance and how to bring it down. When you’re ready to shop, an expert independent insurance agent is ready to find quotes and discounts for you, helping you save both money and time — time you could spend enjoying your new vacation home.

What Is Vacation Home Insurance?

Vacation home insurance is a type of homeowners insurance that’s designed to cover the unique needs of a vacation home, from adverse weather (especially if your home is on the beach) to the extra risks of crime and vandalism in a home that you occupy only part time.

Sometimes it’s an extension of your homeowners insurance on your primary residence. Other times, it’s its own unique policy. If you offer your vacation home for rent on services like Airbnb, then your vacation home insurance should also include business insurance, since business use is explicitly excluded from regular homeowners insurance coverage.

How Much Does Vacation Home Insurance Cost?

Most vacation homes will cost between a few hundred and a few thousand dollars to insure annually, though pricier vacation homes can cost a lot more. If you offer your home for rent, then you need to purchase business insurance. This will add a few hundred to a few thousand dollars to the cost annually, depending on the size of your business.

What Affects the Cost of Vacation Home Insurance?

A few key factors will affect how much you pay for vacation home insurance:

Value: Unsurprisingly, more expensive vacation homes will cost more to insure, while cheaper ones will cost less.
Location: The location of your vacation home matters both because different insurance companies operate in different territories, affecting prices, and because different locations face different risks. For example, living in a hurricane zone will raise the cost of your insurance.
Building materials and design: The cheaper your home is to replace, the cheaper it will be to insure. Unique or artistic design elements will raise the cost because they are more difficult or even impossible to fully replace. Additionally, a home made of sturdier materials will be cheaper to insure, since it’s at a lower risk of damage.
Size: Larger homes are typically more expensive to replace, driving up the cost. Alternatively, a tiny vacation home could have a higher risk of fire (from kitchen accidents) or wind damage. Either way, the size of your vacation home matters to the cost of insurance — though whether it helps or hurts you will depend on your specific situation.
Any other special risks on the property: Storing a boat or other recreational equipment can raise the cost. Features like pools, fire pits and trampolines can also make vacation home insurance more expensive.
Business use: One of the single biggest factors in the cost of vacation home insurance, using your vacation home for business (such as short-term rentals on Airbnb or a similar service) will definitely jack up the cost of insuring it.

America's Most Expensive Vacation Homes

Unsurprisingly, expensive vacation homes will be more expensive to insure, while simple, rustic properties will be cheaper. Properties in the following areas can expect some of the highest vacation home insurance costs in the nation.

Median sales price of vacation homes in selected counties in the United States in 2018 (in 1,000 US dollars)

What if I Offer Short-Term Rentals of My Vacation Home?

If you offer short-term rentals of your vacation home, then you must buy business insurance: no ifs, ands or buts. It’s not a legal requirement, but it is a common-sense one. That’s because running a business on your property exposes you to massive new risks, including:

Lawsuits: Frivolous or not, lawsuits are expensive to resolve. Guests could sue you for their injuries, a ruined vacation (if your property didn’t meet their expectations), and much, much more. Business liability insurance pays for legal representation and damages, if you owe them.
Theft, vandalism, and general havoc: Drunken or rowdy guests can do a lot of damage to your property, including stealing the furnishings you provide. Commercial property insurance covers these scenarios.
Angry neighbors: Many neighbors resent short-term rentals nearby and actively seek to shut them down, which is another way you could get caught up in expensive legal action. Again, business liability insurance can help.

How Can I Find Vacation Home Insurance Discounts?

Insurance discounts don’t quite work like 10% off coupons at the grocery store. They’re more like mind-meltingly complicated math problems, all based around the risks your property faces. Luckily, you don’t have to know the math to find the discounts.

Here are a few easy ways to lower the cost of vacation home insurance:

Install sprinklers and other anti-fire devices: In addition to keeping you and your family safe, installing anti-fire equipment will reduce the cost of fire damage if a fire does break out. Insurance companies reward you for managing this risk.
Install burglar alarms and security systems: Like sprinklers for crime, these systems both discourage theft and vandalism and make it easier to catch the perpetrators when they do strike. This makes your property safer.
Reduce the risk of injury on your property: Getting rid of your kids’ beloved trampoline is bittersweet, but a definite way to save on insurance costs. So is repairing broken decks and docks, cleaning up broken glass and trip hazards and generally keeping your property spiffy.
Bundle your vacation home insurance with other kinds of insurance: Okay, so this one does work more like a coupon. Insurance companies want your money, so if you buy multiple types of insurance with the same company, they’ll cut you a deal. Try bundling your vacation home insurance with your car insurance, boat insurance, primary homeowners insurance and more to net sweet discounts.

Independent insurance agents are industry experts who can help you find even more discounts. You can work together to balance the coverage you need against the price you can afford.

Shopping for Vacation Home Insurance with an Independent Insurance Agent

Unlike captive agents, who only work for one insurance company, independent insurance agents maintain relationships with lots of companies. This allows them to shop around for quotes that meet your unique needs — helping you find the real right fit as opposed to the right fit from just one insurer.

Better yet, if disaster strikes and you need to file a vacation home insurance claim, an independent insurance agent can handle the red tape for you, filing paperwork and helping you hit important deadlines while you and your family get back on your feet.

Shopping for vacation home insurance with an independent insurance agent is shopping smart, plain and simple.

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