Insuring a Second Home
In Coastal Florida

Question: I have a home under construction in Cape Coral, Fla., in an inland location. For the first few years, I will rent it out six months a year and my mother will live there the other six months. I plan to live there eventually. Should we seek residential or seasonal insurance?

-- Ruth Bobadilla, San Francisco

Ruth: The answer to your question depends on a number of variables, including the extent of your current homeowner’s coverage and how insurers view the home’s mixed use as a residence and a rental property.

You should first find out how much vacation-home coverage your current homeowner’s policy in California provides. Most primary-home policies include some coverage for a second home. Additionally, your primary insurer may have special offers available based on your existing customer status.

Once you know what coverage (if any) is available through your existing policy, look for a policy that picks up where your current insurance leaves off. If the insurer of your primary home can write policies for Florida property (e.g., if the insurer is a large, national company), you could possibly get a rider (or supplementary coverage clause) that will extend or alter your policy to fully cover the extra home. You may also be able to secure a separate policy for your vacation residence through the company.

Tell your insurer(s) that the Florida house is a primary residence that will have occasional rental activity, recommends William Stander, a regional manager at Property Casualty Insurers Association of America in Tallahassee, Fla. Because you will be leasing out the residence, to cover any tenants, you may need extra fire and hazard coverage written into what will otherwise be a basic homeowner's policy.

Whether you'll need coverage beyond what a general homeowner's policy can supply depends on how frequently you plan to rent out the property, says Rade Musulin, a vice president at Florida Farm Bureau Insurance Co. in Gainesville, Fla., and a volunteer for the Florida Insurance Council. The fact that your mother will be there half the year should work in your favor, he notes. Although you will also rent the property out, having one tenant (versus a succession of short-term vacationers) there for most of the year will reduce insurers’ perception of "risk exposure" to the property.

It's likely you will need to chat in depth with Florida agents before configuring a new policy, my sources say. If you’re not sure how to find local industry professionals, try the Florida Market Assistance Program, which matches property owners with insurers.

As for the cost of your Florida-home policy, there are two factors in your favor. Your home is inland, where hurricanes tend to do less damage. Also, since your home is new construction, you could qualify for breaks on insurance if your builder has followed the latest building codes and is using the latest hurricane-hardy construction materials.

Your home's ability to withstand strong winds is a major factor in the prices you'll pay to an insurer. The risk of wind damaging a home accounts for 15% to 70% of the costs for home-insurance premiums, according to the Florida Department of Community Affairs. Therefore, if your house is built with wind-resistant materials or architectural features, your insurance costs may be lower. Visit the department’s site for more details.

-- Ms. Hodges is a free-lance writer in Seattle. She answers questions about managing second homes in Owner's Manual. Please send your questions to RealEstateJournal@wsj.com.

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