LANSING - If you're planning a trip to a vacation home, a time share, a rental property, or a home exchange this summer, keep in mind these properties might have specific insurance needs. But be careful not to waste money by over-insuring your summer vacation. The Office of Financial and Insurance Regulation (OFIR) offers these tips to help you prepare a well-planned vacation that includes insurance protections.
“Taking the time to do an annual insurance check-up can prevent costly headaches that disrupt a summer vacation,” OFIR Commissioner Ken Ross said.
Renting a Vacation Property or Participating in a Home Exchange
If you're renting a property or exchanging homes with another family this summer, your homeowners insurance policy might extend to the property where you'll be staying. Generally, as a renter you are not responsible for damages caused by unavoidable accidents, such as faulty plumbing. However, there are circumstances where you could be considered partially responsible for damages due to negligence, and you may be expected to pay for them.
Personal belongings you take on vacation - such as a laptop, camera or clothing - are generally covered by your primary homeowners policy. Read your homeowners policy before going out of town so that you know if there is a maximum amount it pays for a loss. If you don't feel you have enough insurance for the belongings you plan to take, you may consider additional or temporary personal property coverage.
Secondary Home Insurance
If your secondary home or vacation home has a mortgage, your lender may require homeowners insurance just as it would for your primary residence. However, there may be additional stipulations in the policy because you only reside in the home for part of the year. Like with your primary homeowners insurance, it is important to review the policy for your secondary home every year and keep an up-to-date home inventory in case you would need to file a claim following a loss.
Even if you do not plan to spend time at your vacation home, you might consider maintaining coverage for the structure, contents and your liability in the event that someone gets injured on your property while you're not there.
"Named Perils" Coverage
Homeowners insurance for a secondary home can have significantly different terms than your primary home's insurance policy. How a secondary property is used and how often it is occupied during the year determines the type of coverage. Insurance for these properties is typically written on a "named perils" basis. A "named perils" policy covers losses for events specifically outlined in the policy, such as lightning, explosion, theft or smoke damage.
Homeowners policies also typically provide liability coverage in case a guest is injured on your property or if you are responsible for damage to another's property. Your homeowners policy might also include medical payments coverage that would pay an injured person's medical bills to a stated limit, regardless of negligence.
If you have an umbrella policy in place to provide excess liability coverage, the policy should automatically extend to any new property you purchase or rent. To be sure the umbrella meets your liability expectations and that there are no exclusions in the policy that might be triggered by the new property, read your policy before making your down payment.