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Written by Katie Rook

What you need to know about cottage insurance

Cottages can be insured in two ways: as a secondary property on your existing home insurance policy, or, as a separate, stand-alone policy. 

This type of coverage is relevant for a cottage, cabin or chalet which insurance carriers describe variously as a secondary, recreational, vacation or seasonal properties. 

When determining the details of a policy for a cottage, they’ll take into consideration the same details as they do for home insurance. They’ll also be interested in how often the property is occupied and whether it’s rented out. 

You’re likely to end up with a ‘named perils’ policy for your cottage – rather than a comprehensive policy. A named perils policy will clearly outline what perils are covered. For example, you may be covered for fire and explosion, but not for water damage and vandalism. 

A cottage insurance policy is also likely to have exclusions and not cover damage to nor loss of: motorized vehicles, campers or trailers and buildings on the property used for farming.

Frequently asked questions about cottage insurance 

What is cottage insurance?

Insurance for your second home will protect you, the owner, in the event of damage while also offering liability protection. Cottage insurance will have many of the same features as a home insurance policy, but is likely to offer less extensive coverage.

Many cottage insurance policies in Canada are named perils policies, meaning they only cover named perils. They’re also likely to have exclusions, so, when you’re securing coverage, make sure you clearly understand the policy details.

For example, you could end up with a policy that excludes protection against water damage, vandalism, sewer back-up and flooding. These are significant details, particularly if it’s conceivable that while you’re away from your cottage, any of these difficulties could easily arise.

Do I have to get insurance for my cottage in Canada?

Like home insurance, cottage insurance in Canada is not mandatory. However, most owners get it, appreciating that repair and replacement costs tend to be significant and in many cases more significant than coverage costs.

In addition, most cottage insurance policies offer liability protection which is well worth considering if you’re often hosting guests. With liability protection under a home or cottage insurance policy, you’ll be protected if someone is injured on your property or if their property is damaged.

If you rent out your cottage on a consistent basis, you’ll need cottage rental insurance in the form of a landlord policy.

To figure out what insurance to get for your cottage, start with a quote using our free, online tool.

How much does cottage insurance cost?

Like home insurance, many factors go into determining cottage insurance rates in Canada.

While it’s difficult to name an average cost, location is an important consideration, in addition to the size of the cottage and its state of repair. You may end up paying more for coverage if your cottage is difficult to reach in the event of a fire.

Consider how much coverage you need for your cottage and what you can do without. For example, if you’re comfortable with a named perils policy that excludes protection against vandalism, you’ll be able to minimize your costs.

Use our free, online quote tool as a calculator for your cottage insurance costs.

Are cottage and second home insurance the same thing?

Yes. Many carriers will only insure a cottage if they also hold the owner’s home insurance policy. In these instances, they’ll add the cottage to the home insurance policy as a second home.

Can I bundle home and cottage insurance?

The good news about bundling your home and cottage insurance so each policy is held by a single insurance provider is that you may receive a discount.

Make sure to ask your broker about any discounts available to you if you also bundle your auto insurance.

What does cottage insurance cover?

Many cottage insurance policies are named perils policies, meaning they cover the perils named in the policy, but don’t cover perils that are not named.

Your policy may include protection for damage against other structures on a vacation property such as a boathouse. Some cottage insurance policies will include coverage for boats of a certain size and horsepower and up to a certain limit.

What does cottage insurance not cover?

Be clear on any exclusions your cottage insurance policy contains. For example, water damage, which is covered under most comprehensive home insurance policies, may be an exclusion in your second home insurance. That’s something you’re going to want to be aware of – particularly when you’re not at the property.

The following are other common exclusions for cottage insurance: water damage, septic back-up flooding, fuel oil release, earthquake, motorized vehicles such as ATVS or snowmobiles, campers and trailers and any outbuildings used for farming purposes.

How can I reduce the cost of my cottage insurance?

You may be eligible for discounts when you bundle two or more policies. For example, if your home and cottage insurance are held by a single provider.

Other cottage insurance tips include:

Any steps you take to prevent or mitigate risk to your cottage may also make you eligible for a discount. For example, installing a burglar alarm and having someone regularly check your property may give an insurance carrier confidence that any potential risks to your property are being well-managed.

Can I rent out my cottage and still be covered?

Many insurance carriers will allow an owner to rent out their cottage on a limited basis.

If the cottage is an income property that’s rented out consistently, your best bet for cottage rental insurance is getting a landlord policy.

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