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Is it 2nd home, seasonal home or an rental?

By Frank Laisch

Services for Real Estate Pros Insurance NPN # 13379201

February 05, 2012 11:53 PM

When your client is purchasing a property, making sure they have the right policy is important.

Several months ago we were quoting a homeowners policy for a couple in Vermont purchasing a home in Florida . the client stated, "it was a second home for seasonal use".

we review several Insurance options and quotes available, then a couple days later the client stated, they had a lower quote from a different agent. We advised the client that that price was for a full time second home and not for seasonal use. They decided to go with the lower quote.

The client called us the other day wanting to take our policy we quoted,

they received a notice of cancellation from the carrier stating the usage of their home was not what it was intended for as THERE WERE RENTERS LIVING IN THE PROPERTY.

We did write the policy for them after they realized that even though they were insuring the home, having the right policy is very important.

The Risk the Insurance carriers look at is if it is a 2nd home used regularly, 2nd seasonal home-used only a couple months a year or if it is an investment property rented to others.

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Gabrielle Kamahele Rhind

KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ

Broker/Owner

GOOD MORNING FRANK! Great advice - I often have to explain to clients that "renters insurance" is not the same as home owners insurance and that usually leads to this conversation!

Feb 05, 2012 11:55 PM

Wallace S. Gibson, CPM

Gibson Management Group, Ltd. - Charlottesville, VA

LandlordWhisperer

I had this VERY argument with a would-be client last week. He thinks that leaving his current property vacant * not as a second/seasonal home * just vacant would be of interest to his insurance company....I assured him it was as there is potential for claims when the home is not occupied or even visited.

Feb 05, 2012 11:57 PM

Winston Heverly

Coldwell Banker Access Realty - South Macon, GA

GRI, ABR, SFR, CDPE, CIAS, PA

As a public adjuster, I know all to well what people pay for and think they are getting in their coverages. The claims process is where the marble meets the carpet.

Feb 05, 2012 11:58 PM

FN LN

Toronto, ON

Hi Frank - These are very important issues, even in the Canadian insurance market.

Feb 06, 2012 12:00 AM

Diane Grady

Endless Summer Realty - Saint Augustine, FL

Very important to have the right insurance! A company does not have to honor the policy when something happens should you have not given them the proper information. This is like paying to not have any insurance at all! Good advice to your folks!!

Feb 06, 2012 12:27 AM

Linda Holloway

Keller Williams Realty Tampa Central - Tampa, FL

REALTOR®, Your Next Home in Tampa Bay Starts Here!

Hi Frank, It is very important that people have the right insurance policy for the use of the property! Great post!

Feb 06, 2012 01:52 AM

Wallace S. Gibson, CPM

Gibson Management Group, Ltd. - Charlottesville, VA

LandlordWhisperer

Winston's comment is priceless - I'm going to remember "where the marble meets the carpet"!

Feb 06, 2012 02:24 AM

Kristin Moran

Owner - RE/MAX Access - KristinMoran@Remax.net - San Antonio, TX

San Antonio,TX - Real Estate - 210-313-7397

Very importatnt advice. Paying the wrong premium on a home would not be fun!

Feb 06, 2012 07:17 AM

Lakeridge Land Surveying

Lakeridge Land Surveying - Montverde, FL

Excellent information Frank. A friend of mine had the this issue on her rental home and they denied the claim because it was listed as a 2nd home

Feb 06, 2012 08:29 AM

Jo Olson

HOMEFRONT Realty - Kettle Falls, WA

Retired - HOMEFRONT Realty @ LAKE Roosevelt

Very very important and you never want to have a claim if you don't have the right coverage! Great heads up!

Feb 06, 2012 10:40 AM

Frank Laisch

Orlando, FL

"The Insurance Guy"

Gabrielle- Indeed,renter insurance is nowhere close to homeowners insurance. I am sure you have that conversation often

Wallace- SORRY you have to argue with investors on how to protect THEIR investments that you manage.

Winston- very good point, love the comment "Marble meets the carpet"

Marc- yes, there are issues everywhere. just took care of a Canadian who has property in FL on the same issue

Diane- good point, the first thing is claim denial. It is just like burning money

Linda- Thank you, The right policy & the right price is what helps me sleep at night

Kristen- thanks, nobody like to pay for insurance period! its just something ya gotta do.....

Amy- Sorry to hear about your friend, I am sure a lesson learned the hard way

Jo- from you lips to Gods ears, I hope nobody ever has a claim. but if you need it, hope you have it

Thank you everyone for your great comments!!! I am feeling a little warm and fuzzy having a featured post :-)

Feb 06, 2012 11:42 AM

Laurie Clark CRB Angel Realty LLC Your Monument Realtor 719-502-6572

CRB-CCSS-ASD-HBS-RSD-Denver Short Sale Agents - Monument, CO

Angel Realty, LLC

Congrats on the feature! You make a great point, Having the right policy is very important. Thanks for the heads up and for sharing. Have a great week.

Feb 06, 2012 02:26 PM

Charlie Dresen

The Group, Inc - Steamboat Springs, CO

Steamboat Springs, CO e-Pro

Great advice and insurance companies should price policies differently based on type of use. Making that clear to buyers and ensuring they are giving (and receiving) accurate information is important to ensure not only the proper coverage is secured but also that the proper premium is being paid. Just another important detail to get right the first time!

Feb 06, 2012 11:51 PM

Frank Laisch

Orlando, FL

"The Insurance Guy"

Thanks Laurie & Charlie! you are both so right. However there are people out there that think they can swindle by utilizing the cheapest insurance regardless of the actual use of the home....

Feb 07, 2012 12:05 AM

Michael Setunsky

Woodbridge, VA

Your Commercial Real Estate Link to Northern VA

Frank, very good point. Type of use will make a big difference in the premium. The cheapest quote isn't always the best one.

Feb 07, 2012 01:15 AM

Insurance Solutions Unlimited,LLC

Insurance Solutions Unlimited, LLC - Winter Haven, FL

Insurance Solutions Unlimited,LLC

Excellent information frank! many times we see home buyers purchasing a home for one purpose and then switching it to a rental without changing their insurance coverage

Feb 08, 2012 12:10 AM

Al Raymondi

Ocean View Realty Group in Ormond By The Sea Florida - Ormond Beach, FL

Ormond By The Sea Florida - Home and Condo Sales

Nice post Frank, vacant property and rented property is always more of a risk.

Feb 08, 2012 05:31 AM