A vacation home can be an incredible luxury and sometimes even a good investment. Still, there are some essential factors to consider before leaping into second-home ownership—such as insurance costs. Like your primary home, you must insure your vacation home against burglary, fire, weather damage, liability, and other risks. Because insurance can add significantly to the price of buying and owning a vacation home, you may want to consider the likely insurance costs before deciding on a specific property.

Key Factors Impacting Vacation Home Insurance Costs

For several reasons, insurance for a vacation home can be more expensive than the coverage on your primary residence. Notably, your second home may often be unoccupied, putting it at greater risk for theft, vandalism, and undetected damage, like burst water pipes. When you shop for a vacation home, it’s essential to recognize that the following factors will impact your insurance costs:

  • Location—The location of any home is always a factor in pricing insurance policies, but it can be especially significant for vacation homes. The area that makes a vacation home desirable may also make it more expensive to insure. For instance, a ski house or hunting lodge in a remote or mountainous area could be at greater risk for damage due to wildfire. A beach house may be more exposed to a hurricane’s wind damage or storm surge. These location-based risks will impact the coverage price and, in some cases, may incur higher deductibles.
  • Type of Property—As with any house, the age and type of building materials used in a vacation home will impact the insurance cost. In addition, these costs will vary depending on whether your second home is a single-occupancy house, a condominium, or a townhouse. A condominium, for instance, may have lower insurance costs because the homeowners association maintains and insures the property’s exterior and may provide security. Generally, the cost of insuring the unit’s structure will be included in the monthly maintenance fees. Your condo insurance will cover your belongings and specific areas of the unit listed in the policy.
  • Amenities—If your vacation home has a pool, hot tub, or other unique amenity that adds risk, you may pay a higher insurance premium. You may also want to purchase more liability protection as these items are considered “attractive nuisances” that lead to a higher probability of filing liability claims.

Will You Rent Your Property?

If you plan to rent your vacation home to others, your homeowner’s insurance costs will likely increase, and you may need additional coverage. Your insurance needs will depend on how often you rent out the property and for how long. For a one-time, short-term rental, you may be able to add a simple extension (an “endorsement”) to your existing homeowner’s policy. On the other hand, if you plan to rent out your second home regularly, you may need separate business coverage or a landlord policy. While some rental services, such as Airbnb and VRBO, offer coverage for homeowners, it’s essential to read the fine print to determine limits and exclusions.