Recreational property insurance works somewhat differently than insurance for your primary home. How your cottage is used and how often it is occupied will dictate which insurance packages are appropriate.

How Is Your Cottage Used?

Like your home, your cottage is one of your most valuable assets. How much time do you spend there? Do you use it year-round? Do you rent it out at some point during the year? The answers to these questions are important when you are considering what type of insurance coverage to buy for your cottage.

Insurers take into consideration how frequently your property is used, how often it is occupied and if it is rented to others. Most insurance companies will consider insuring your cottage only if they insure your primary residence.

A cottage can be listed on your home insurance as a secondary or seasonal location. You can also have property insurance as a separate, stand-alone policy.

Cottage Insurance Options to Consider

Due to the risk associated with part-time occupation, insurance for your cottage (also known as recreational property insurance) is normally provided on a named perils policy instead of a comprehensive or all risk policy.

With named perils, you have insurance coverage for specific risks such as fire, explosion or smoke damage. Coverage for certain risks, such as water damage or vandalism, may be more difficult or expensive to arrange, due to part-time occupancy. For example, if a water pipe bursts or if vandals break in while your cottage is vacant, the damage is likely to be more severe because it takes longer for damage to be discovered.

Be Aware of What is not Covered

For cottage insurance policies, common exclusions include coverage for septic backup and flooding, fuel oil release, earth movement (e.g., Earthquake) and damage to, or loss of:

  • Motorized vehicles
  • Campers or trailers
  • Buildings used for business or farming purposes.

Even a fixer-upper that is of low value still requires third-party liability coverage. This coverage protects you in case someone is hurt on your property or if you cause damage to a neighbour’s property.

3 Additional Coverages to Consider

  1. Contents. Some insurance packages automatically include contents up to a certain limit. This coverage applies to contents permanently kept at the vacation home. Anything you take back and forth – such as clothing – is covered by your primary home insurance policy. If this coverage is inadequate, additional coverage may be purchased.
  2. Detached private structures. Some insurance packages include a limited coverage for outbuildings such as boathouses, garages or sheds. If this coverage is inadequate, additional coverage may be purchased.
  3. Watercraft. Coverage for recreational properties often limits coverage for power boats, canoes and sailboats. These potentially may be specifically insured by endorsement or amendment of limits. Contact your insurance representative for more information about your cottage insurance options.

Sources: Insurance Bureau of Canada