Practice Sound Risk Management for Your Time-share Investment
More than 4 million Americans own time-shares in vacation and resort property. A time-share is a form of ownership or right to the use of a property in which multiple parties hold rights to reside in the property for an allotted period of time such as 1 week per year. This concept has attracted numerous resort developers such as Marriott and Disney. But the insurance and risk management implications may not be fully addressed and understood. The following are some risk management tips to consider if you have time-shares in real estate.
- First, check to see whether your time-share is a deeded arrangement or a "right to use" arrangement. If it is deeded, then you have a fractional ownership in the property; in other words, you are a part owner and your ownership interest will be recorded with the local county recorder or assessor. In this case, this property would not automatically be an "insured location" under most homeowners policies, and you will want to request that this time-share be added to your homeowners policy to cover your liability exposures. If it is a "right-to-use" or leased arrangement, your homeowners policy will likely consider this time-share an "insured location," and an additional endorsement is unnecessary. Please check, however, with us to verify this.
- For property and liability coverage under either type of arrangement, verify that the property management company has issued certificates of insurance in your name. Also, verify that you will receive renewal, cancellation, or nonrenewal notices.
- Time-share insurance is another policy to consider. It is similar to travel insurance but may offer some additional coverages such as accidental damage to the time-share unit while on vacation.