[fintstone]

The last thing you want is to have a claim and have the insurance company deny it because you misled them or have the wrong coverage.

My rule of thumb is to make the property's insurance match the loan (if I have one) and the way I claim it on taxes (state and IRS). Everything should be the same or someday, one of those entities may find out and want payment/retribution. If you have relatives there, they should be treating all of these similarly.

In some places, rentals also have to be permitted as such (inspected)...so I would consider that as well.

If you are not claiming it as a rental for taxes or a loan, IMHO, you certainly should be able to claim it as a second home that you are allowing family members to use.