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Does Cottage Rental Impact My Insurance?

ICD - Does Cottage Rental Impact My Insurance? 

Owning a cottage gives you a wonderful chance to escape the city life and just get some peace and quiet. However, most people cannot be in their cottage all the time, so they consider renting it out to friends and family or sometimes even posting it on cottage rental websites. Renting out your cottage can also help gain some extra income to go towards the mortgage payments. However, when you have renters in your cottage, you may still be responsible for what happens when they're there, which can impact your insurance. Here's what you need to know about cottage insurance.  

Higher Premiums, Less Coverage 

Due to the nature of having a cottage, most insurance companies understand that they will only be occupied part of the time. Many cottages are not even suitable for the winter season.  

Additionally, most cottages are close to bodies of water and therefore more prone to flooding. If a flood were to happen, it's less likely that someone will be there to find it right away, which means more damage could be done.  

Most people will need to hold a homeowner's policy with an insurance company before they can insure a cottage. Additionally, cottage insurance only comes in the form of named perils instead of comprehensive coverage like you'd get with home insurance. Overall, for insurance on your cottage, you are very likely to pay more in premiums than you would on your home. 

Coverage You Need for Cottage Rental 

If you've decided that you want to rent your cottage, you will need to ensure you have the appropriate coverage so that your guests are completely insured for the entire length of their stay. 

If your guests will be enjoying water activities, then having the right liability coverage will protect you should there be any injuries or unforeseen incidents while they are on your property. Additionally, if they are using your boat, ATV or any other recreational vehicles, you may have to purchase additional coverage for your renters to use these vehicles. Some insurance companies do not offer this kind of coverage, so you may need to shop for the right policy.  

Landlord Insurance vs. Cottage Insurance  

If you will mostly be renting out the cottage instead of using it yourself, you may want to consider getting landlord insurance instead of cottage insurance.  

Landlord insurance protects your property from fire, vandalism and even inclement weather damage. Cottage insurance could be nullified if you rent out your cottage and not just use it for your own personal use.  

Further, landlord insurance offers liability coverage if one of the renters gets hurt on your property.  

 The downside to landlord insurance is that it is, generally, much more expensive than cottage insurance. So unless you are planning to rent out your cottage for the majority of the year, it may not be worth it to get this type of coverage.  

Ways to Lower Cottage Insurance Premiums 

Like with other types of insurance, there are a few ways you can reduce the premiums you pay on cottage insurance.  

  • Keep any recreational or special vehicles (like boats and ATVs) locked away from renters so they can't use them, and this way, you don't need to get coverage for them.  

  • If you're renting your cottage through a company or website, they may offer insurance there for anyone who rents through the website. This additional coverage may save you on your premiums.  

  • Talk to a few different insurance companies to compare rates and get the right one for you.  

Contact Us Today 

Whether you choose to rent out your cottage, it is important that you have appropriate insurance on it. Contact us today to speak to one of our brokers to discuss your options.