Second Home vs. Rental Property Insurance: What’s the Difference and Which Do you need ? https://www.insuracarelife.com/blog/second-home-vs-rental-property-insurance/ Premiums serve as both income and liability for the insurance company, which balances the cost of providing coverage with the risk of paying out eligible claims. Each insurer sets its own premiums based on a number of factors, including the specific details of each policy, personal risk factors, and coverage limits. These numbers are based on formulas developed by mathematicians (called actuaries) who calculate things like risk.