If you’re lucky enough to have a second property – either as a holiday home or for renting out – do you need insurance?
As a general rule of thumb, it’s always a good idea to get assets insured, so second homes are no different. If you keep your second home for vacations, there’s no way of knowing about leaks, robberies, or fires while you’re not there, which is why insurance is crucial to protect yourself and your investment. But insurance companies are wary about adding second homes onto their policies as hazards can go unnoticed for much longer and lead to bigger problems.
Unlike your own home, if there is a small leak that goes unnoticed, it could become a huge problem and damage the structural integrity of the property before you step back into the house, meaning there’s more chance of your insurance company having to pay out. Without the security of someone in the property being able to keep an eye out for potential risks, insurance companies can reject your application to add an empty second home to your policy.
There are certain insurance companies that only allow one home per policy. Before shopping around for homeowner’s insurance for your second home, it’s worth checking with your current policyholder about adding a second house to the same contract.
That said, homes in different locations will have separate lists of risks and hazards. If your main home is in the city, there will be much less risk of flooding as opposed to your condo by the ocean. And, if the properties are of different sizes and values, your current insurance might not cover everything properly.
Umbrella insurance, on the other hand, is an additional layer to protect all your assets – from homes to cars to interior possessions. This type of insurance sits above your other policies to add that extra coverage in case of emergencies.
Second Homes for Renting
If your second property aims to provide you with an extra monthly income, you’ll need specific insurance to cover the house and those living in it. For example, Europeans do have a lot of second homes and vacation properties on the Canary Islands. Any home that will be used by other residents will need to be covered by liability insurance and landlord insurance. Liability insurance will protect you if a resident makes a claim or complaint against you.
As such, it’s unlikely you’ll be able to add this house to your current policy. Some may offer ‘fair rental income protection’, which could help reimburse monthly fees if the home becomes uninhabitable for a short period (due to repairs etc.).
Whatever you’re using the second property for, there are risks that need to be considered. Leaving possessions in an empty home could make you more susceptible to break-ins while you’re out of the area. But without insurance for your rented accommodation, you could find yourself paying for repairs and damage out of your own pocket.
Before buying a new property or policy, speak to your current insurance provider to check out the options, as it will be much easier to manage if your policies are with the same company!