Insurance for a vacation home is different for one simple reason -- you're not there as much.  It generally costs more than regular homeowner's insurance and may have additional requirements.

If you rent out your vacation home, you can expect to pay 20% over the cost of ordinary second-home insurance. That's because you'll be there even less than most second-home owners and insurers feel your house is at even greater risk

In general, you can save money on vacation home insurance if you have an alarm system (a quick 20% discount at many companies) or buy in a gated community (the extra security may earn you another 10% discount.)  In rural areas, fire department access to a water source such as a stream or lake can earn an extra discount as well.

But the best way to save money is to buy your vacation home insurance from the same agent who sells your regular homeowner's policy.  Many companies offer special "package" rates for multiple homes.  Combine your vacation home with your homeowners, auto policy and umbrella coverage and you're likely to save even more.

Speaking of umbrella policies -- if you didn't buy an umbrella liability policy before you bought your second home, you have enough assets to warrant one now. An umbrella will extend the liability limits (typically $300,000) on your homeowners, auto and even boat policies for a reasonable sum. We recommend a minimum of $1 million in umbrella liability for people who own two homes.