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Snowbirds Require More Insurance

Liability is a concern, especially for retirees with a lifetime of savings to protect

It’s that time of year when the weather gets cold and the snowbirds head south. But being a snowbird requires more insurance than usual, says David Rodeck, Kiplinger's Personal Finance.

For instance, snowbirds have two homes to insure. Liability is another concern, especially for retirees with a lifetime of savings to protect.

“The best rule of thumb is preparedness,” says Joe Meisinger, chief underwriting officer for personal insurance at Travelers. He suggests starting by understanding what the policies you already have cover. To get you ready for a worry-free winter, these tips can help you evaluate your property coverage and spot ways to trim costs.

Don’t keep secrets from your insurer. When you own two homes, your insurer will ask you to list which is your primary residence – where you spend most of your time – and which is secondary. If you spend an equal amount of time in both states, the insurance industry standard is that you name the state where you have your driver’s license as your primary residence.

You’ll end up paying higher insurance rates for your secondary residence, so you may be tempted to list the more expensive residence as your primary, even if you spend less time there. “If you list one house as your primary, but you’re only there three months a year, that can create major issues,” says Matthew Henaghan, an Allstate insurance agent in Hockessin, Delaware.

For example, if a pipe bursts and you don’t discover the damage until much later in the year, your claim could be denied.

In Henaghan’s experience, the major insurance companies will only sell you a policy for a secondary home if they are also insuring your primary residence, though some smaller insurance companies, like American Modern and Foremost, will insure a secondary residence alone.

Insurers generally do not include secondary homes as part of their standard bundle discounts, which let you save money by buying multiple policies – like home, auto and life insurance – from the same company. But it’s always worth asking if an insurer will give you a discount for insuring two homes.

One extra benefit you may want to add to your policy is water backup coverage. “According to Travelers’ data, 20% of homeowner’s insurance claims result from water damage unrelated to weather events, including frozen pipes that can lead to leaks,” says Meisinger. If your house catches fire while you’re in another state, chances are you’ll get a phone call, but you might not discover the damage from a burst pipe for weeks, even months.

Your liability coverage may also need to be increased. “You aren’t there so there’s an opportunity for trouble, like kids setting off fireworks in your backyard,” says Henaghan.

Someone with two homes may also have a higher net worth than the liability coverage limit on a standard homeowner’s policy. By purchasing an umbrella liability policy, you could get an additional $1 million in coverage for a few hundred dollars a year. Henaghan recommends purchasing enough umbrella liability insurance to cover your total net worth – including both homes, your vehicles and retirement savings – against potential lawsuits.

Editor’s Note: David Rodeck is a contributing writer at Kiplinger’s Personal Finance magazine,

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