Property & Finance
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Insuring Your Cabin

By Mark R. Johnson
Published: June 1, 2009

Insuring your vacation home almost always costs more than insuring your primary home, since it’s not occupied full-time. That makes the risk higher for an insurance carrier, especially when it comes to theft and fire. But there are some ways to reduce your homeowners insurance bill for your second home.

Shaving Homeowners Costs

 • Installing a central alarm system for fire and burglary protection can shave 15 to 20 percent off your policy.

• Hiring a caretaker to check your house on a daily or weekly basis won’t get you an immediate discount, but your insurer may factor it into the price.

• You can save money with a “package policy” in which you combine your primary home insurance, second home insurance, car insurance, boat insurance and maybe even umbrella liability insurance. Using one company to handle all these policies can cut 5 to 10 percent of your costs.

• If you didn’t have an umbrella liability policy before you bought your second home, you may have enough assets to warrant one now. An umbrella will extend the liability limits (typically $300,000) on your homeowners, auto and even boat policies for a reasonable sum. Insurance experts recommend a minimum of $1 million in umbrella liability for people who own two homes. That’ll run about $300 per year. For landlords, umbrella policies are especially crucial.

And If You Rent It Out

Are you planning to rent your place? If so, here are some additional insurance tips for you:

• Some insurance experts will advise that if you rent out your vacation home, your property becomes an even greater insurance risk. But it’s not as simple as that. On the positive side: Some insurers will look at the fact that because your cabin is rented, someone’s there, thus reducing the risk of fire and theft of an unoccupied home. On the negative side: Some insurers will look at renters as a greater liability risk. Bottom line: If you rent out your place, seek an insurer who holds the positive point of view.

• Most second home owners rent out their homes fully furnished. If you decide to rent empty, make sure your insurer knows this, as it will cut your need for contents coverage.

• If your renters bring their own belongings, they must have their own insurance for them. They can’t claim any losses under your policy.

• It is a good idea to require your long-term tenants to carry renters insurance.

Editor Mark Johnson works at taking the positive point of view.

Source: Thank you to the Insurance Information Institute, www.iii.org, for contributing to this article.

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