Kurt Thoennessen, VP at Ericson Insurance Advisors, discusses the risks of owning a luxury second home with Dan Sweeney, President of Danco Management.

Danco Management LLC offers property and grounds management services for owners of luxury homes in and around Litchfield County Connecticut.

Featured Guest:
Danco Management
President - Dan Sweeney
http://dancomanagement.com/

 
Interview Highlights:

How is owning a second home different than a primary home? 

·         Second homes can be seasonal usage, periodic uses or both. Seasonal homes develop concerns due to inconsistent usage and in a lot of instances the concerns go unreported (out of sight, out of mind). The fact that they may be dormant poses potential issues when it comes to the overall preservation plan.

What are the added risks? 

• Limited occupancy – Houses, like vehicles, do not do well if they sit dormant. Systems should be used on a regular basis to ensure proper operation and to identify any issues that may arise (plumbing, water filtration, generators, doors, windows, etc..)
• Rental exposure - From a property management standpoint, the care and usage exposure is a variable often difficult to narrow in on. Renters and guests may not understand the home’s systems and operation. Their use of the home may result in costly repairs and frustration for both parties. 
• Unprotected – Second homes may be located far from the normal protections that primary homes benefit from such as a fire department, water source and other protection services. 
• Vacation spots - With the erratic weather we have had over the last several years, homes we manage have really been well tested from an elements standpoint. Ice, rain, droughts, etc. 
• Maintaining heat - My experience is that aside from the water damage exposure, fit and finishes don’t like large temperature and humidity swings (cabinetry, trim, flooring to name a few). Performance built homes have many variables that are factored into a home’s performance and manually disturbing that calculation can lead to potential issues.
• Monitoring water use - Water conservancy is a huge concern for any home where an onsite water well is the domestic source. Also, there is a need to monitor areas where conservation measures can be implemented.

What are some of the most common issues that arise in second homes? 

• ·         What are the maintenance issues? Deferred or unidentified issues such as mechanicals, exterior surfaces and infrastructure lead to costly capital expenditures.
• ·         What are the insurance issues? Gaps in coverage based on usage,  geographical factors not allowing for prompt response, updating property status and revisiting policy coverages (additions, upgrades to interior, wine rooms, art galleries, etc..)
• ·         Changing the usage without considering the impact on your insurance. Surprising the insurance provider with new information at the time of new claim

What services do you provide? 

• ·         Property preservation/maintenance/management, construction management

Do you have a specific service for homes that are being rented on home sharing sites? What does that look like and what are the risks? 

• ·         AirBNB and second homes - Local ordinances may cause a property to operate outside of regulations. Properly managed, some properties can have revenue streams to offset operating expenses and ensure home is being used. Wear and tear by others can be concern, if not clea