Homeowners insurance may or may not include loss of use coverage. When homeowners include this coverage for their primary home, it generally provides money to help them find a temporary place to live if their home is damaged by a covered incident. Coverage for a second home depends upon the way that the second home is used and the unique policy provisions from your insurer.
If a second home is rented out, you will not be concerned with the loss of a place to live, but you may be covered for your loss of income. You cannot collect rent if your rental property is permanently or temporarily rendered uninhabitable. Landlord insurance, a type of homeowners insurance, could provide coverage for your business losses while your property is being repaired. Note that your tenants need to provide their own relocation assistance, or loss of use, with renters insurance.
If you only use your second home as vacation getaway, you need to look at your policy provisions. In any case, it will be prudent to let your insurer know exactly how you intend to use your second home when you buy second-home insurance so they can explain exactly how your unique coverage will work. While typical loss of use coverage includes compensation for reasonable expenses to live in comparable housing, the test of reasonableness might be in questions if you only use this property for vacations and could simply go home. On the other hand, you may have extra expenses associated with supervising repairs or an interrupted vacation. Again, policies differ, and it is best to make sure you understand your vacation home loss of use coverage before disaster strikes.
Some people purchase a second home for employment use. These individuals might have seasonable employment or business concerns in a different area than the location of their primary home. The home is not being used as a business, but a home, so extra expenses for temporary housing and relocation should be reasonable.
Again, the loss of use provisions can vary from policy to policy. Some policies only provide compensation for expenses that are over and above your normal obligations. Others cover your mortgage, transportation, and related expenses while you need to stay out of your property. These can vary a lot between various insurers and even specific policies from the same company. Careful homeowners of first and second homes will make sure they understand exactly what is covered by their home insurance before they need to make a claim.
Based outside of Houston, ML Katz has been writing financial articles since 2000. During that time, she also worked as a financial professional and website developer. She received a Bachelor of Business Administration with a concentration in information systems from the University of Texas, Austin in 1981.