Cheaper Coverage On The Cottage

Vacation homes run the gamut from palatial oceanfront estates to log cabins beside a lake. Whatever their character, though, most need insurance protection from the elements, fire, and crime. Typically, owners insure second homes the same way they do primary residences--with a standard homeowner's policy that covers damage from fire, windstorm, or theft, as well as personal-property losses and third-party liability.

Trouble is, vacation hideaways generally cost more to insure than primary homes. That's because they're unoccupied for long periods and tend to be located in remote areas without easy access to firefighting services or near coastlines subject to erosion and flooding. They also don't qualify for preferred rates offered to homeowners who insure their cars with the same company.

Recently, however, Chubb Group has rolled out a separate vacation home policy that can lower premium costs. It's available so far in 14 states, including popular second-home sites such as Arizona and Maine. The new policy squeezes savings of 30% off Chubb's traditional coverage and as much as 20% off competitors' rates by adjusting for differences in the way people use their first and second houses. Unlike a conventional homeowner's plan, which will cover personal property losses equal to as much as half the dwelling's value, Chubb's vacation policy sets a limit of 30%. The reason is most people keep fewer valuables and personal effects at a beach house or country cabin. The policy also cuts replacement living expenses from an unlimited amount to 30% of the dwelling's value. Thus, the owner of a $500,000, seven-year-old vacation home in the Aspen/Vail (Colo.) area would pay $1,005 a year under the new policy, vs. $1,501 under the old one, or $1,220 with Aetna.

Other big carriers aren't planning to follow suit. But even if you buy a regular policy, some accommodations can trim premiums. "Firefighting accessibility is the main thing," says Dan Hattaway, an underwriter with State Farm Fire & Casualty Co. Instead of choosing a place at the end of a long dirt path, settle for one on a paved road a bit closer to town.

DEAD-BOLT DEAL. Security measures are also cost-busters. Dead-bolt locks, smoke detectors, and fire extinguishers can get you premium credits of up to 10% with State Farm, and monitored alarm systems reap bigger savings. Aetna takes 5% off if you buy in a "controlled-access" community. Other tips: Engage a caretaker and install low-tem-perature sensors that alert you before frozen pipes burst.

Saving on a Second Home

Here are ways to shave insurance premiums on a vacation house:

-- Install a theft and fire alarm hooked to a central monitoring station

-- Choose a location that's readily accessible to firefighting and emergency services

-- Use sensors that sound an alarm if the temperature drops low enough for water pipes to burst

-- Ask a neighbor to keep an eye on the place or hire a caretaker

-- Compare a price quote on Chubb Group's new vacation home insurance policy against a traditional homeowner's policy