How Do I Protect My Second Home or Seasonal Residence?
Is your second home or seasonal residence also a short-term vacation rental? If so, you may encounter some legal and insurance complications. No one wants to face increased liabilities if a loss occurs at a beach home or secondary residence. Here are a few ways you can be sure that your vacation rental activities do not negatively impact your insurance coverage.
On the popular new HGTV® show “Vacation House for Free,” host Matt Blashaw helps homeowners realize their dreams of beach home ownership. Blashaw recommends owners offer those dream homes as a weekly rental to help them pay the mortgage on that often pricey secondary residence.
While this is a creative and increasingly popular way to pay for a second home, consider a few important ways to protect yourself as a homeowner. Here are a few tips to help ensure you protect your home and your assets if you do decide to rent your second home.
- Strongly consider hiring a property manager. An experienced property manager will advertise and handle the entire rental process. A property manager can help with all aspects of the transaction, including screening prospective renters and developing and maintaining legal rental contracts. A property manager will obtain and hold security deposits and will stay up-to-date regarding any local laws and taxes associated with property rentals. They collect the rent and handle any routine maintenance and repair damage to your property. Ideally, your property manager should be close enough to your rental home that he or she understands the local laws, has local contractors on call and can inspect your property monthly if allowed by your rental contract.
- Make sure you have the proper insurance to protect both your property and your liability exposures. A personal umbrella or a general liability policy offers liability protection in the event of a lawsuit. However, you may need a substantial change in your homeowners policy to cover the change in occupancy created by a rental property, even if you rent it only for part of the year. Before you rent your vacation home, contact a Trusted Choice independent agent to ensure your current policy adequately protects you and your property.
- Make sure you eliminate hazards from your home. You may think that adding a trampoline, for example, would improve your chances of renting the property. However, trampolines and swimming pools present major liability exposures. Improving lighting, keeping shrubs trimmed and ensuring you keep the premises in top condition without adding unnecessary add-ons can help avoid injuries and reduce your chances of a lawsuit.
- If you live relatively close to your secondary residence, don’t rely solely on your property manager to ensure the property stays in great condition. After tenants vacate, inspect the premises to ensure that your property manager has addressed any damages to the home and has provided needed maintenance. If the distance is prohibitive, perhaps a trusted neighbor can also check your house occasionally.
- If you decide you’re going to handle the rental without a property manager, educate yourself. Most states have organizations that provide sample lease language and help educate homeowners so they don’t run afoul of local ordinances and laws.
Secondary or seasonal home ownership is a wonderful way for families to get away and enjoy time together, as well as build equity for a strong financial future. Many online sites tout the benefits of renting that get-away home for a few months, but don’t always explain the downsides. To protect your family’s home and your assets, these simple steps can help you have a great landlord experience and enjoy the benefits of your secondary residence.
Please remember that the comments contained in this blog are general in nature and that coverage under any specific policy of insurance will depend upon the terms and conditions of such policy.