- the potential for severe weather in your second-home area;
- the amount of time the home will be vacant; and,
- the liability and potential damage from renting.

Given all these factors, what can you do to minimize the effect and create a lower insurance rate for your second home?

Regarding Severe Weather
If you live in a flood area, you can call the Federal Emergency Management Agency (FEMA) to find about flood insurance. You can also look at special coverage for earthquake and fire if needed in your area. These additional insurances may be expensive, however, by getting separate coverage for disasters, you only get the coverage you need for your area, and the rest of your home insurance policy would be lessened.

Dealing with Vacant Property
To offset the high cost of second home insurance, it would be worth investing in items that create insurance discounts, including smoke detectors, fire extinguishers, and deadbolts. Putting in a central alarm system for burglaries and fire can cut 10 to 20% off of a premium, with an investment of only about $300 to install and $70 in yearly service fees.

If you purchase a home in a gated community, you may also be eligible for more discounts. Hiring a caretaker for your house may reduce the rates in some cases. In addition, if you plan to have constant rental tenants, this will reduce the surcharge for vacant property (although it does add costs for liability).

Handling Rental Insurance
When it comes to insurance for rental properties, as a minimum you will need to carry fire insurance. However, the more comprehensive policies cover the contents of the building, such as furnace, tools, landscaping. The majority of policies do not cover tenant’s possessions. If you rent the house unfurnished, this can reduce your insurance policy since it doesn’t need to cover the costs of the property. This will work only if you can easily move your belongings in and out of your property when you are there.

For rental, another major consideration is liability insurance. This includes accidents on your property and protection against being sued. You can also include insurance against rent loss, vandalism, and malicious tenants. The most helpful source for information are insurance companies that specialize in rental insurance, such as the Chubb Group of Insurance companies.

Combining Insurance
Consolidating insurances often provides a discount to home owners. In addition to using one company to insure both homes, you might consider getting an umbrella policy, which extends your liability coverage and extends to both properties as well. As mentioned above, this is especially helpful if you are renting the property out.