There are homes that cannot be adequately covered under standard home insurance. Below are a few examples of such homes, and why they might require unique homeowners insurance coverage.
Regular home insurance can cover a vacation home. However, the rates are likely to be slightly higher than they are for your primary residence. This is because of the elevated risks that vacation homes face.
For example, many of the things that make a location great for vacationing also make the locations dangerous. A beach house faces a high risk of flooding, a mountainside house faces a high risk of damage due to ear movements, and a home in a remote area faces a high risk of wildfires.
Apart from location, many vacation homes also remain vacant a good chunk of the year. Vacant homes also face more risks of damage and theft than occupied homes. Thieves usually target vacant homes due to the low risk of being discovered. In vacant homes, a minor problem can worsen and trigger costly damages before anyone notices it.
Your home may also require different insurance coverage if you regularly rent out the home. Your home insurance company may require you to purchase an endorsement to your existing coverage, buy a rental policy, or buy a business policy.
An endorsement policy might suffice if you only rent out your home for short periods or do it irregularly. However, you may need landlord insurance if you plan to rent out your home for long periods. Say you have multiple homes and you regularly rent out the ones you are not using.
Again, a different policy is necessary because rental homes also face unique and heightened risks that primary residences don't have. For example, a tenant is not likely to take as good care of your home as you would. Some tenants can even steal your stuff or cause damage to your home.
Homes with Businesses
Lastly, you may also need enhanced coverage for your home if you run a business at home. Say you have a home bakery, you have a woodworking garage or you tutor school kids in your home. All these businesses face risks that you wouldn't have to worry about if you didn't run those businesses in the home. For example, the kids can get hurt in your home or your oven can burn down the kitchen.
For this reason, your home insurance won't cover your business-related losses. Most carriers will advise you to buy an endorsement to your homeowner's insurance coverage if your business is relatively small. Once your business grows, however, you will need a business owner's policy even if you still run the business from home.