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If you own a vacation home or property in another country, you have some unique insurance considerations. Here are a few tips to help you protect your investment.
Whether it’s for personal use or purely an investment, residential property owned in a foreign country can be complicated. Every country and geographic region has its own distinct risks, rules and regulations you must be aware of and comply with.
Other challenges include ongoing maintenance, security and insurance, particularly if the property isn’t in full-time use. Here are some tips to protect your international property for years to come.
Know the risks to your property
Learn about the area and the risks your property may be exposed to. For example, civil unrest and crime are problems worldwide. Take appropriate security measures to keep your home safe from break-ins and vandalism. These could include an alarm system, cameras, gates or a professional security service. Having effective security is especially important if the property is not consistently occupied or will be left vacant for long periods of time.
Another risk to be aware of is the weather. High winds, water or serious drought conditions could damage your property.
Having adequate building and contents insurance is essential to ensure your international property is covered against catastrophic events.
Work with a reputable property manager
When you own a property abroad, there’s a good chance you won’t be spending 100% of your time there. That makes it difficult to properly maintain the property or respond if anything happens while you’re not on site.
A local property manager can be a valuable resource for handling any issues and can help you understand the resources that are available if you need work done. Some insurers require someone to visit the home periodically, and a property manager can fulfill this mandate.
If you plan to allow short- or long-term rentals, a property manager can handle bookings and take care of tenant accommodations. They can also handle ongoing maintenance or cleaning services. Know that coverage for a rental property may differ from insurance for a secondary or vacation home. Speak to your insurance agent about how to properly insure your property if it’s a rental.
Find a global insurance advisor
Every country has its own insurance requirements, but many lenders worldwide require building insurance to protect their interest in the property as long as a mortgage is held.
It may sound daunting to buy insurance abroad, but it shouldn’t be a problem. Many insurance agents have partners in other countries who can help you get exactly what you need and handle claims if they arise. If you are about to buy abroad, talk to your regular insurance advisor first to see if there is a seamless way to get a trusted agent overseas.
Beyond “building insurance,” as it’s often called, you may need liability insurance. Liability coverage responds if someone is injured on your premises. That is usually rolled into an all-risks home insurance policy, but check the terms of coverage to be sure. You can buy it separately in many countries if you are not already carrying building insurance.
You will also probably want contents coverage, which may be part of a standard all-risks policy or purchased separately in some countries.
Flood insurance is included in home insurance in some countries but not in others, so ask about that if you are at risk of flooding. In some countries, earthquake coverage is part of home insurance as well. In others, you may have to buy it separately.
If you plan to employ any staff at the property, extend your liability insurance to cover their actions and injuries. Any vehicles you keep at the property will need to be covered as well.
You may also wish to ask about alternative accommodations coverage in case your residence is rendered unusable by a disaster. Finally, look into emergency travel coverage, which helps pay to get you to the property fast in an emergency.
Working with an insurance agent with an international presence or access to a partner in your foreign locality can help you determine what your exposures are and secure the coverage you need to protect your assets.
Contact V.F. McNeil Insurance with any questions you may have. As a Trusted Choice® independent insurance agent, we've proudly been serving the property and casualty insurance needs of Connecticut residents and business owners since 1886.