Imagine returning to your vacation home for a season of fun only to find water, mold, pest, or hurricane damage.
As home watch professionals we are constantly dealing with issues that occur in unoccupied homes, issues that often lead to insurance implications. Therefore, homeowners, new and old alike, constantly ask us what is covered or excluded in their homeowner’s insurance policy. And, if a “covered loss” occurs, what actions are they responsible to take to ensure they are reimbursed.
“Covered Loss” – damage to a person or property covered by your insurance policy.
In order to protect your home, knowing your homeowner’s insurance is vital. Further, knowing what is in your policy is only part of the challenge, you must also know how the insurance company expects you to act in the event of a disaster.
In the event you have to file a claim for any “covered loss” related to your vacation home, the process itself is the same as how you would handle a claim for your primary home. But, what is eligible for a claim is not.
The biggest difference between Secondary Home Insurance and Primary Home Insurance is how “perils” are handled. Secondary Home insurance is written on a “named perils” basis, while Primary Home Insurance is written on an “open perils” basis.
“Peril” – an insurance term used to describe what causes damage to a person or property.
An insurance policy written on a “named perils” basis covers only perils that are explicitly stated in the policy. An insurance policy written on an “open perils” basis covers all perils unless explicitly excluded.
|Primary Home Insurance|
Covered unless explicitly excluded
|Secondary Home Insurance|
Only covered if explicitly listed
When it comes to secondary home insurance, one size does not fit all, there are many different policies and “exclusions” that apply.
“Exclusion” – a “peril” listed in your policy specifically as not being a “covered loss”.
Therefore, it is important to thoroughly review your policy for your vacation home to ensure that any loss you want covered is in fact listed in your policy as such.
Although it is impossible to cover everything that could happen, there are a few issues and “exclusions” worth pointing out, that may apply due to the unique nature of a vacation home:
There are a million different scenarios that can determine if water damage to your home is due to a “covered loss” or not. Generally speaking, if the source of water damage originates from inside your home, such as a burst pipe, and it was an accident, it is likely a “covered loss”.
However, if water damage is from an outside source, such as a flood, it is likely not a “covered loss”.
Secondary homeowners insurance covers mold damage if a “named peril” caused it. Otherwise, an insurance company will likely not cover mold damage.
Home insurance policies usually don’t cover mold that resulted from a preventable water leak, flooding or high humidity.
Therefore, it is best to try and prevent mold from growing in the first place.
It is important that if you plan to buy a second home, especially in a humid climate, to have a home watch company periodically checking your home and monitoring your humidity levels. The home watch company should be taking humidity readings every time they visit.
According to the National Pest Management Association, pests account for billions in property damage every year with termites alone accounting for over $5 billion.
Worse, the longer pest damage goes unnoticed the worse it gets and most insurance policies do not cover pest damage. Vacations homes are unoccupied for long periods of time making this especially problematic.
Your need for pest control will depend on the type of home you have. If you own a condo then your HOA may cover this service for you but if you own a single-family home, then you are responsible for obtaining pest control services yourself.
If you are not sure if your HOA provides this service, you should contact them to confirm. Furthermore, if you need assistance locating a pest control vendor, your home watch professional is a great resource to help you.
Normal storm damage is covered under a Secondary Home Insurance Policy if it is a “named peril”.
However, if a storm is classified as a hurricane, it will not be “covered”.
You must have a completely separate policy for hurricane damage.
A vacation home is typically vacant for extended periods throughout the year. Further, even if it is a “covered loss”, there are expectations that you will immediately address the issue.
Most insurance policies have provisions that require you to take immediate action when a loss occurs to prevent further damage. Having a “covered loss” occur is one thing but you still owe a duty to the insurance company to prevent any additional damage from occurring.
The fallen tree example is the best way to illustrate this. If a tree fell on your home, you wouldn’t just leave it there, exposing your home to the elements, causing further damage. There is a tree in your house! You would address it immediately.
Of course, if you are not around to know that a “covered loss” has occurred then you may inadvertently do exactly that. Thus, exposing yourself to the risk of paying for these repairs out of your own pocket.
This is why it is important to have someone watching over your property on your behalf. A professional home watch company that encounters any issues should be taking steps to actively mitigate and remedy a situation to prevent it from worsening. A professional home watch company should be visiting your home frequently, either weekly or bi-weekly.
It is important to prevent issues from ever happening in the first place. But, just as important is to catch them as soon as they do to satisfy your duty of care to the insurance company for covered losses. This is to protect yourself financially.
Unfortunately, there is not a simple answer to how long you have. Different states have different laws determining different answers. In general insurance policies tend to give vague language such as “You must notify us promptly of any loss”.
The real concern to have when your home is vacant for an extended period is if you don’t notify the insurance company of a loss right away and additional damage occurs because of it.
This can be especially troublesome for those with vacation homes that are unoccupied for large portions of the year.
Therefore, as stated before, it is important to have someone checking your home weekly or bi-weekly to ensure any incident that occurs is reported in a timely fashion. A reputable home watch company will never agree to perform checks once a month as it will leave their clients vulnerable to claim denial.
Owning a vacation home is one of the most cherished milestones for any family. Therefore, it is important to thoroughly understand your insurance policy and how it works.
The process for filing insurance claims for a secondary home is the same as for a primary home. But, you need to know if the “Cause of Loss” is listed in your policy.
Further, even if an issue is a “covered loss” you owe a duty of reasonable care to the insurance company to mitigate a loss from getting worse or you will have to pay out of your own wallet.
Since insurance policies for a vacation home operate on a ‘named perils’ basis it is important to ensure that you understand exactly what your policy protects you against. This is important because Vacation homes have several key risks (i.e., water, mold, pests, and hurricanes) that are not always covered.
Having a professional home watch company routinely check your home is critical to spotting early signs of damage so you can notify the insurance company in a timely fashion before damage can become worse and help protect your home from the things that are not covered at all.
If you have any questions for the Halo Home Watch Team, please email us or leave a comment below!