This is the time of year when it gets colder and snowbirds start to migrate south. The National Association of Home Builders based on data from the Census Bureau’s 2016 American Community Survey. This is the most current data available. It estimates that 7.4 Million Americans have a second home. Most of these homes are located in warm climates such as California, Arizona, and Florida.
However, it’s not all roses and sunshine for snowbirds. Two homes can mean insuring both the properties and possible two cars. For retirees who have a lot of savings, liability is a concern.
Joe Meisinger is chief underwriting officer at Travelers for personal insurance. He says, “Preparedness is the best rule of thumb.” He recommends that you start by learning about the coverages that are already in place.
You might even consider making your annual home and auto insurance review as seasonal as your trip to a warmer location. Even though your insurance requirements may not change much from year to year the cost of these policies will. These tips will help you prepare for a worry-free winter.
Do not keep secrets from your insurer
If you have two homes, your insurance company will ask you which one is your primary residence. The one you spend the most time at each residence during the year is your primary residence. Your primary residence in New York is your residence if you live nine months in New York, and three months in Florida. If you spend equal time in either state, the insurance industry standard requires that you identify the state where your driver’s licence is issued as your primary residence.
Your secondary residence will cost you more insurance, so it’s tempting to make the most expensive one your primary even though you live there less. Matthew Henaghan is an Allstate agent in Hockessin. He says, “You don’t want to share secrets with your insurance company.” “Listing one house as your primary residence, but only being there for three months per year can cause major problems.”
If a pipe bursts, and you don’t notice the damage until later in the year; your claim may be denied.
According to Henaghan’s experience with insurance companies, they will not sell you a policy for your secondary home if they insure your primary residence. However, some smaller companies like American Modern or Foremost will insure the secondary residence.
Insurance companies generally don’t include secondary homes in their standard bundle discounts. This allows you to save money by purchasing multiple policies from the same company, such as home, auto, and life insurance. It is worth asking your insurer if they will offer a discount for two homes.
Meisinger says, “Review your homeowner’s insurance policy to make sure it covers all your needs and talk with your agent about any questions.”
Water backup coverage is an additional benefit that you might want to add to your policy. According to Meisinger, 20% of homeowners’ insurance claims are due to water damage that is not related to weather events. You might get a call if your house is set on fire while you are in another state. However, you may not be able to see the damage caused by a burst pipe until weeks or even months later. Water backup coverage is a good idea.
You may need to increase your liability coverage. Henaghan says, “You’re not there so there’s an chance for trouble like kids setting off fireworks at your backyard.”
A homeowner who owns two homes might have a greater net worth than the standard homeowner’s policy. For a few hundred dollars per year, an umbrella liability policy can provide additional coverage of $1 million. Henaghan suggests that you purchase enough umbrella liability insurance in order to protect your net worth, including your homes, vehicles, and retirement savings against potential lawsuits.
The Car is Garaged at Home
Auto insurance requires that your vehicles be registered and insured in the state they are “garaged” most often during the year. If your car is only kept in Florida, it should be registered and insured there. You should insure and register a second car that you keep each winter in another state.
If the vehicle is being driven between homes, it doesn’t require auto insurance in either state. Only the one where it spends the most time of the year. It should be registered and insured in New York if the vehicle is only in New York for nine months while it is there. Like home insurance, choose the state in which you hold your driver’s licence.
Do not be tempted by the low insurance rates to insure every vehicle in the state. You could be accused of insurance fraud if you do. Henaghan says that although it might be more expensive to do this correctly, you won’t have to worry about your claim being denied because of technicalities.
If you have vehicles in more than one state, there are ways to save money on your auto insurance. Check to see if your insurer offers a pay per mile policy such as Allstate’s Milewise program. This way, even if your car is in a garage for months you can save money.
Another option is to cancel your liability coverage on a car that you’re not driving. You should make sure that no one else is allowed to drive the car while your away. Henaghan says that even if your grandson or neighbor borrows the car to do a quick trip, and cause an accident, they are still liable. Before you take the vehicle out again, make sure to renew your liability coverage.
Even if the car isn’t being driven, it is important to maintain basic comprehensive coverage that covers the vehicle against theft and vandalism. Henaghan says that homeowner’s insurance will not cover personal vehicles. To cover the possibility of your garage falling while you are away, comprehensive auto insurance coverage is required.
Protect your Seasonal Home
Avoiding costly claims is the best way to save money on your insurance.
- Call a plumber. Meisinger suggests that you seek the advice of an expert before you leave. A plumber can check your pipes for freezing and advise you on how to turn off your water supply.
- Hire an informal caregiver. Ask a friend or neighbor to come by every few weeks. This way, a problem can be caught earlier and prevented from causing more damage.
- Install an alarm system. Henaghan suggests that an alarm system be monitored by someone, and not just a buzzer. Alarm systems can also monitor fire and call the fire department.
- Keep track of your water usage. Dropcountr, a free mobile app that tracks your water usage, can be used to detect unusual spikes while you are away. This could indicate a burst pipe. Smart shut-off valves such as Moen’s Flo allow you to turn off water remotely in an emergency.
- Stop thieves. It is easier to burglarize a home that appears occupied. Forward your mail and packages, and hire a snow removal company to install motion detector lights. Meisinger states that these small, but crucial steps can help you keep thieves away and provide peace of mind.
- Place your vehicles in a garage. If you leave your vehicle outside for several weeks, it becomes more attractive to thieves and makes it more appealing for them to break in.
- Keep the keys to your car. You can take the keys with yourself if you have removed liability coverage for an unoccupied vehicle.