Home insurance question
 

Almost a year ago, I bought a house about 3 1/2 hours from us, so my stepdaughter and her husband could live there, and so, as my wife put it, "Our granddaughter doesn't grow up in a sh**hole". At the time we insured it as a rental, even though what they're giving us is nowhere near market rate, and just barely covers expenses with a little left over if something needs fixing.

This year I want to shop around a bit for insurance, especially since the company we have it with has raised the rate another $100. One of the agents says since we are at the house several times a year, we can insure it as a vacation home rather than a rental. He said it doesn't matter that they're living there. Does this sound legit? I'm all for saving a few bucks, but if a claim gets denied, then that's no good.

Thanks in advance.

No, I'm not buying that part about "doesn't matter that they are living there" for you to go from rental insurance to vacation home insurance, and I'll tell you why.

My sister passed away in late 2018. I was the Executor of her estate and she left me her small home in a multi-home building in her will. Her long time locally sourced homeowner's policy came due in early 2019 while the estate was still being settled. The local agent let me slide and renew it still in her name since I was the executor. By early 2020 the estate was still not resolved and we renewed the same policy again. Wasn't until late 2020 that the estate was closed and title transferred to me. Early 2021 renewal came due and agent was well informed that since her passing, I had been working on cleaning out and straightening up the home, several times a week, and the home was only 22 minutes from my home. So now the policy needed to cover an "unoccupied dwelling" until it was sold or changed to a rental policy if I decided to rent the home out to someone. Cha Ching. If there is ONE thing the insurance companies don't want it's a home that isn't occupied because no one is there when a pipe breaks. Or it catches on fire. So I don't think going from a rental policy to your family, that is actively living in the home, to a vacation home policy where "you are there several times a year" and the rest of the time it is unoccupied (which it's not) would be any less expensive. I don't think how ever much or little they compensate you in rent would matter.

Doesn't sound legit to me.

On its face it doesn't sound right. I am an agent in NJ so Wisconsin may be different. In general insurance policies are standardized but each company does have nuances and there are different levels of coverage and if you go outside the admitted market (Statefarm, Geico, etc.) into the excess market (Lloyd's) you may find variations.

In my market most of our secondary Homeowners policies will permit renting, but they all limit the amount of time for renting from a few days to up to 12 weeks. So renting is permitted but not if the tenant is a full time resident.

On a side note, I hope you required your daughter to purchase a tenant homeowners policy (HO-4) ? If not do it even if you it. You will save yourself and them a lot of headaches if something does happen.

the usury of the insurance thugs is amazing

esp as it is a must have as most do not actually own their homes
but are subject to the banking rules requiring that you get ripped off

local wind storms [hurricane] is not covered by basic home ins
so they hi-jack 5k or more every year in addition to the normal rip off plus the fed flood ins

I see ins as a bet that you will lose
so I put 20K in an armored [steel] roof plus 1/2''ss cables to the slab

got steel shutters for all windows and doors [do not forget that big garage door]

and 4 years later I am ahead of the game plus if we do get a cat 5
the neighbors will be over here after their roofs fail

The stupidity that you post never ceases to amaze me.

as does the greed of those who get laws/rules passed to be sure they have a steady income

I'm more concerned with liability if the shiftless son-in-law doesn't shovel the snow off the sidewalk, and somebody slips and falls, than I am if the house is damaged or destroyed.

Question - both quotes are at rebuild cost, why would I need that? I have no loan on the house. Shouldn't the "value" of the house be it's current assessed value, minus what you could sell the vacant lot for, plus whatever it might cost to remove the debris from the lot?

For liability protection on some of my houses & property, I have "a rider" for each attached to my primary house policy which extends my liability protection to them also. I think it adds about $75 each. If a house burns to the ground.... I probably made a bad decision though.... but nothing I can't absorb without blinking... twice :D

First. Insure it with honesty.

If so, you will be fine.

Nota? I too make my living in insurance. Consider this. We ALWAYS want the insurance company to come out ahead in the long run. Why? If not, they won’t have dollars to pay on your worst day. Insurance companies DO go bankrupt.

Insurance is often voluntary. There are not that many instances where it is mandatory. Even though I make my living in insurance, there is a part of me (all of us) they hates the industry.

A mature understanding is that we need to feed the machine so that we can cover that which we value.

Make sense?

I am not a homeowners insurance agent and haven't slept in a Holiday Inn lately but there are two things I know.
1) Every company every state is different.
2) If you need to make a claim (god forbid), the company will be looking for an excuse to not pay for a claim. If it is found that you falsely claimed the status of the home you may end up with 'no soup for you'.

Play it safe and be honest. You will sleep better at night.

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.

Just to finish this one up -
I was going to switch this house to Farmer's, who would insure it as a second home.
However, the agent found out he couldn't do that if our primary home was not insured with Farmers.
The wife was supposed to get some more quotes, because she has a job schedule that gives her days off during the week, and more importantly I hate talking to salesman. Well I'm not sure what happened, or what she said, but not one of the agents she called a couple of weeks ago got back to her. I guess they don't need our business. Time is running out, the bill is due tomorrow, so I just renewed with State Farm. I guess we'll shop again next year, or maybe in 6 months when the cars are due again.

I have State Farm Insurance for my home and cars (4)
I just received a bill from them and realized how low they are....or how high the comcast bill is.

I pay almost exactly the same for 4 cars and the home as the Comcast bill per year. (the comcast bill includes internet, phone, and tv.)
(I'm not too happy about the Comcast bill)