When you purchase a rental home – whether for long-term tenants or as a vacation rental home – you must factor in the cost of insurance. Vacation rental home insurance is compulsory for those who finance the purchase, which most buyers do.
Just as you did research and shopped around for your vacation rental home, you must do research and shop around for rental home insurance. It’s harder than just signing up for a policy online, but it is a well-placed effort to ensure you have the coverage you need at the best price.
Here are some short- and long-term tips for saving money on your vacation rental home insurance.
TIPS FOR SAVING ON VACATION RENTAL HOME INSURANCE PREMIUMS
Many vacation rental homeowners find that the premiums for vacation rental home insurance are as much or more than the premiums for their primary residence. But that doesn’t mean it’s impossible to save money. On the contrary, take these steps, and you can be confident you’re getting the most value for your money.
MINIMIZE VACANCIES IN YOUR VACATION RENTAL HOME
The more often your vacation rental home sits vacant, the higher the risk of damage, theft, and other crimes. If your property regularly remains unoccupied for longer than 30 days, your premiums will be higher due to greater risk.
Ensuring your vacation rental home rarely goes unoccupied and doesn’t stay unoccupied for long periods helps you keep costs down. If finding and screening tenants isn’t practical for you, you should work with a management company that can ensure a steady stream of guests with minimal vacancy time.
RAISE YOUR DEDUCTIBLE
The deductible is the amount you, the policyholder, must pay before insurance coverage kicks in. The higher the deductible you’re comfortable with, the lower your premiums will be.
In other words, a policy with a $500 deductible will cost more than the same policy with a $1,000 deductible. Keeping a separate savings account dedicated to covering a reasonably high deductible can save you money both short- and long-term.
BUNDLE POLICIES
Insurers frequently offer discounts for people who buy multiple policies from them. For example, you may save by having the same insurer cover your cars and your vacation rental home. Likewise, you may save by having your primary residence’s and rental home insurance policies from the same insurer.
KEEP PROPERTY IN GOOD REPAIR
Maintaining your vacation rental home in good repair saves money. For example, spotting and fixing a loose shingle on the roof of your rental home can save you significantly over ignoring the problem.
Additionally, the safer your vacation rental home, the lower the chances for a claim based on theft or injury. Ensure your rental home has features like high-quality locks and sufficiently sturdy stair railing, and you can help prevent claims.
In some cases, insurers offer discounts for home security systems and “smart” home systems. Always ask about the availability of these discounts.
AVOID MULTIPLE SMALL CLAIMS
The cost of your vacation rental home insurance premiums depends partly on your claims history. Should you make a claim for a small repair that you could accomplish inexpensively yourself? You will have to weigh this cost against making a claim and potentially raising your deductibles.
The more claims you make, the higher your premiums will be. Furthermore, some insurers balk at histories of multiple claims and, in some cases, may not offer coverage because of excessive claims.
COMPARE POLICIES AND PRICES
Know how much coverage you need, and then compare policies. You may want to start by getting a quote from the insurance company that covers your primary residence. They may offer a discount if you buy another policy from them.
The best way to compare coverage and costs is by working with an independent insurance agent. An independent agent can ensure two things:
1. Your policy will offer all the coverage you need.
2. You’re comparing “apples to apples” when comparing premium costs.
It takes some extra time to shop around for vacation rental home insurance. Independent insurance agents ensure that your time investment is minimal and that your choices will all fulfill your needs.
HAVING CORRECT COVERAGE ULTIMATELY SAVES YOU MONEY
Saving money doesn’t only mean saving money on premiums. Having sufficient coverage helps ensure that you won’t face surprise out-of-pocket expenses.
Working with an experienced insurance agent is your best approach to getting enough coverage without buying unnecessary coverage. Striking this balance is the key to long-term savings when you insure your vacation rental home.
Your independent insurance agent has the expertise to ensure that your vacation rental home is valued correctly. This is critical to determining the amount of coverage you need. They will also have access to policies by many different insurers, so it is easier to compare coverage costs.
If you are willing to put in a little extra effort, you can save money on your vacation rental home insurance. Increasing your deductible is a tried-and-true but easy way to do it, but there are other things you can do.
Don’t take any shortcuts – with coverage amounts or upkeep on your vacation rental home – and you can be confident you’ll save money. You will be less likely to have to make claims, and if you do, you’re less likely to have big out-of-pocket expenses.