I just read the October/November edition of The Robb Report Vacation Homes magazine. The article "insuring your vacation home against visitor mishaps," by John Morrell and Nikki Swink, had some very good information for second home owners.
We know home insurance protects us when a guest hurts herself while visiting. But did you know there is insurance specifically for vacation homes? If you don't have it already, it's a good reason to touch base with your insurance broker. Your broker will want to know if the home will only be used by you, or will you rent it? How many days a year will it be used thus?
You may have decided to insure your vacation rental as an owner-occupied residence to save money on the premium. Your policy may then be void should a tenant injure herself. What if you don't rent it, but you occasionally loan it to friends? Then your policy needs a guest provision. You may want this provision to cover your guests against wrongful entry or eviction.
If you own a condotel or conhotel, be sure to provide your insurance broker with copies of that neighborhood's bylaws and rental management agreement. You want to be certain your policy is written to accommodate this new breed of real estate.
Do you already have the correct policy on another vacation home? Ask your insurance broker if an umbrella policy would be a good fit. Be sure to share how the properties are held. Are they in a trust, LLC, partnership or corporate entity?
As you know, how your vacation home is used may also have tax consequences, either now or when you want to sell. If you are on the ball with your 2008 taxes and are talking to your CPA this month, you might check to make sure you are on the same page in this respect.
If all this has got you thinking about your next visit to relax in your beautiful Big Island vacation home, please don't forget to stop by my Mauna Kea Resort office on the Kohala Coast and say hello! I love to talk story.
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