What You Should Know About Seasonal Residence Premiums
Maybe you just bought your little slice of heaven off the beaten path, and you’re all set to get away and relax. Or perhaps you’re one of the lucky ones who have been getting away for a while. Either way, it’s crucial to ensure that your seasonal property is insured correctly to avoid future unwanted (and often costly) repair or replacement bills.
It pays to know what kinds of factors affect the premiums you’ll pay. These are the top 3 secrets you should know about seasonal property insurance premiums:
Location, location, location.
Did you know that the distance of your cottage or vacation trailer to a fire hydrant/fire hall, or even the rating of the closest fire hall, can affect your insurance premiums? It’s true — the farther away you are, the greater risk of loss in a fire.
Building materials and heating methods matter.
Here’s a hot topic to ponder: how will you be heating your piece of paradise? Oil heating typically results in higher insurance premiums (primarily due to the risk of oil leakage) than gas, propane, or electricity. If you have woodstoves, they’ll need to be Wood Energy Technology Transfer (WETT) certified. When used as your primary heating source, woodstoves will also increase your premiums. And, while we’re talking wood, remember that log homes are more expensive to insure because they cost more to repair in the event of damage.
The type of pay-out you want determines the amount you pay.
Consider this: If the worst should happen and your cottage is a total write-off, what kind of compensation would work best in your situation? Your insurance policy can reimburse you for the replacement cost (the amount it would cost to rebuild your cottage as it stood before completely) or the cash value (the price your cottage would have been worth if it hadn’t been destroyed). The differences in cottages and locations can be pretty extreme, so you should think carefully before deciding on your specific property. For example, maybe you have a “bare-bones” hunting cottage in a very remote location. The cottage itself might be worth very little, for example, say, $20,000 if you were to purchase it today. But rebuilding it would be cost-prohibitive since materials would have to be shipped or hauled to the remote site (potentially 2-3 times more expensive than the cash value). In this case, the replacement value (closer to $60,000 with all the extra costs to get materials to your property) would give you more coverage than the cash value ($20,000). As you might expect from this example, the premium you’d pay for a replacement value policy would be higher than a cash value policy.
Remember, too, that a good maintenance plan can help you avoid common and avoidable claims, which can pay off in the long run. When you’re claims-free, you could be eligible for premium discounts. Want to connect with an advisor to learn more?