Your type of home and why it impacts home insurance

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Photo of kids having a pillow fight in Florida

You may already know that your home can be used in a variety of ways. You can live in it, rent it out, or use it to host monthly dance contests where everyone is dressed up in monkey suits (look, it’s your home). 

But did you know that the way you use your home could have a massive impact on your home insurance policy?

It’s true. 

Home insurance providers pay close attention to the way a home is used in order to assess risk. This also plays an important part when shopping for home insurance, as you might find you’re either paying too much or too little and are at serious risk of being underinsured. 

Both situations are problematic, so what do you do? Well, you read this blog. 

Below, we’ve compiled a list of the most common ways a home is used, and the best insurance to take out for it. You’re welcome. 

Primary home 

A primary home defined as the residence you live in for the majority of the year. It is also assumed that your primary home contains most, if not all, of your personal belongings. 

Taking out a homeowners’ policy in this instance would be the best choice, as it typically covers the structure your home, personal property and even personal liability up to certain limits (protect that 20-inch screen TV!)

Add-ons are also available, which can save you financially from earthquakes or flooding. It’s worth noting, however, that homeowner’s policies do not usually cover the normal aging of your house. 

So that monthly monkey party of yours, you might want to keep it to a minimum. 

Investment property 

Your home is considered an investment property if you do not live in the residence for the majority of the year, and you rent it to other tenants. 

These homes are generally purchased with an intention of earning a profit and are long-term investments. So, I’m sure we can all agree that it’s necessary for you to protect it with some sort of insurance so that you don’t lose all of your money. Yes?

In this case, it would make more sense to take out a dwelling policy, which only covers the building itself and, at times, liability. The idea here is to pay for only the coverage that you need and even save a bit.  

Secondary and Vacation homes

Ah, our homes away from home. 

What is considered a secondary home?

A secondary home is a residence that you occupy in addition to your primary residence for part of the year. This could be a condo in a city where you frequently conduct business, for example. 

Vacation homes, on the other hand, are just as the name suggests – a property that’s used for recreational purposes. It’s typically located somewhere warm, sunny, and close to the beach. Actually, that’s all Florida homes. 

Moving on. 

So, what types of insurances are right for these homes? More expensive ones. 

Policies for a secondary or vacation home come at a usually higher price than if the same home were someone’s primary home. That’s because having someone live in the home all year long helps protect against threats, such as burglars. 

If you occupy the home more than three months a year, some companies will require that you purchase dwelling insurance and then add on personal property coverage if you keep furniture and other belongings in the residence. 

But there are ways you can get discounts on the insurance premium, and that’s by adding in security features like a central alarm system. 

Business property 

Your home is considered a business property, or a commercial property, if it’s income-generating, either from capital gain or rental income. 

Taking out insurance is one of the most important moves you can do to ensure the future of your business. Standard business property insurance covers your building, your furniture and equipment, and your inventory. 

Some may even cover your fence and landscaping as well as your outdoor sign. 

FAQ

Why does it matter if I own or rent my property?

The type of insurance you require depends entirely if you own or rent the home you live in. If you own, then a homeowners’ insurance policy will be best. This is may also apply to owners that rent out their homes or use it for other reasons. If you rent, a renters’ policy might be more suitable.

What if I own the home and rent it out?

If you own your home but rent it out, you could get a dwelling policy or a special landlord policy. This is If you live in your home but rent a portion out, you should seek out a homeowners insurance policy.

What if I Airbnb my house?

If you regularly list your home on Airbnb, you may need a business or commercial policy. Some insurers offer special policies that can add to your existing one. You can find more information about listing your home on Airbnb here.

What if I run a business inside of my home? 

Your home is considered a business property, or a commercial property, if it’s income-generating, either from capital gain or rental income. If this is the case, you might need standard business property insurance covers your building, your furniture and equipment, and your inventory. 

What if this property is just a vacation home?

Even if your home is used for recreational purposes, you might still want to take out a homeowners insurance policy so that all of your basics are covered. If you occupy the home more than three months a year, some companies will require that you purchase dwelling insurance and then add on personal property coverage if you keep furniture and other belongings in the residence.  

If you’re not sure in which of these categories your home lies, get in touch with one of the independent agents at HoneyQuote.com.

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