Your current homeowners policy may allow for coverage of two properties under one policy, but because there are unique risks with a second home, a separate policy may be more conducive to obtaining the coverage you need.
Before you consider the risks, here is a podcast reminder about how owning a second home is the anti-dividend:
Here are some of the special risks you may need to cover:
LONG PERIODS WITHOUT OCCUPATION
An unoccupied home can invite trouble. Without a presence, there is no one to fix a leak, respond to weather damage, or even report a fire. It also may become a target for burglars.
While seclusion may be a top priority for a vacation home, it also means that you may be far removed from the services that can prevent larger losses, such as a fire hydrant or fire department.
Renting out your home when you’re not using it may be a good idea to offset the costs of ownership. However, having renters (or even guests) may increase your liability to any damage or injury associated with their stay.
Be sure to work with an agent to secure the right coverage. Also discuss the benefit of raising your personal liability coverage to protect you from any increase in risk to your personal wealth that may come with offering your home to guests and renters.
Nick Hopwood, CFP® is a financial advisor and Founder of Peak Wealth Management in Plymouth, MI. Nick believes in providing education and guidance so you can retire with confidence.
- National Association of Realtors, April 2017
- The information in this material is not intended as legal advice. Please consult a legal professional for specific information regarding your individual situation.
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