As taxes and other expenses for cottages continue to increase, many cottage owners are looking for creative ways to soften these costs.
This has motivated some cottage owners to rent out the cottage on a weekly basis during peak season when the cottage is not in use. However, it is vital that your insurance provider is aware of your decision to rent out your cottage beforehand. Failing to notify your insurer may cause a material change in risk resulting in a claim being denied.
Many insurance companies will permit your cottage to be leased up to 4 weeks a year with an additional charge for the increased liability exposure. If more than 4 weeks a year is required or your present insurance company cannot accommodate this liability, your broker may need to change your policy to a business policy. In these circumstances, it will be important to review with your broker what coverage changes are required.
Another important consideration will be any additional services you may be providing. Do you have a boat that will be used with the cottage rental? Your insurance company may accept the risk with a boat of lower horsepower and a reasonable maximum speed. However, they may not accept the risk with a higher horsepower capable of higher speeds, as this increases the liability exposure.
Here is something to think about, if you decide to rent out your cottage it can be on your own terms. You can choose when to rent out your cottage, whom to rent it out to and for how long you want to rent it.
Your broker will be happy to discuss all of your concerns. Your broker will also be able to provide you with options that will allow you to rent out your cottage without jeopardizing your insurance protection.
