A timeshare is not automatically covered by your Homeowners policy. Do you want to rely on coverage provided by the building insurers – assuming they exist? Given the relatively low cost, we think that you should be proactive and add coverage to your Homeowners policy if available and appropriate.
First, liability coverage should be added to your HO policy. If the unit is for your use (insured only), it should be listed on the declarations page as an insured location. If the carrier agrees to this, the cost will be slight. If the unit is rented out, an HO 24 70 Endorsement – Additional Residence Rented to Others – should be added. Again, the added cost should be minimal. It the unit is used by you and rented out, then both endorsements should be added.
Next, owned personal property in the timeshare occupied by you is covered under your basic HO policy subject to a limitation of 10% of your HO personal property coverage. This amount could be increased by using the HO 04 50 endorsement. If the unit is rented out, this coverage will not apply. If coverage is needed for personal property in a rented unit, a business policy form would be required. The expense here might be considerable.
Loss of Use coverage is not available under an HO policy in either the occupied or rented circumstance. Further, Loss Assessment coverage may be desired depending on the ownership arrangement. For the owner occupied unit, this coverage should be available by endorsement – HO 04 35 with limits above the $1,000 supplied by the endorsement available. In most cases, this coverage would not be required given most ownership arrangements. The need or lack thereof should be verified – the cost of coverage would be minimal.
There are no HO policy territory restrictions. Therefore, timeshare units outside the US would be covered under an HO policy as described above subject to insurance company acceptance.
The costs to insure will be small but the exposure should not be neglected. Too many clients don’t even mention timeshare ownership to their agents when outlining their owned assets. Don’t forget!
