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Everything you need to know about home away from home insurance

May 11, 2011

Actually, it’s a good idea to review all of your insurance policies on an annual basis to make sure that you’ve covered everything you need to cover and also that you’re not paying for coverage you no longer need, and cottage insurance is no different.

Here is everything you need to know about buying insurance for your cottage.

Cottage Insurance

Buying insurance for your cottage is very similar to buying insurance for your home. In fact, cottage or seasonal properties are most often listed as an add-on to your home insurance policy, and many companies will not consider offering you insurance for your cottage if you do not already have home insurance with them as well.

There are different types of home and cottage insurance that you can buy:

  •     Comprehensive. Comprehensive home insurance covers you for all perils other than those specifically excluded from the policy. Most often, policy exclusions cover events such as "Acts of God" that are considered to be uninsurable due to the cost of covering the potential damage.

  •     Basic. A cheaper alternative to comprehensive coverage, basic coverage only covers you for specific perils listed in the policy. The specific perils that are covered in this policy can vary considerably, but are usually events such as fire, theft and certain kinds of property damage. Vacation properties such as cottages are nearly always insured as a basic policy, since they are only occupied during parts of the year and are more vulnerable to certain perils.  
  •     Broad. A broad policy is a combination of comprehensive and basic policies. You most commonly see it as comprehensive insurance for the structure of your home or cottage and basic coverage for the contents of your cottage.

    What items do I need to insure?

    You need to insure your cottage for the building’s structure, and your personal belongings that are stored within. Usually, your cottage insurance covers your personal belongings up to a certain dollar value. If you have expensive recreational vehicles or other equipment stored in your cottage, you can add extra insurance coverage for these items for an added premium or on a separate policy.

    Another important consideration is third party liability insurance. You should have insurance to cover personal injury to another person while on your property. For example, if one of your friends or neighbours is injured while on your property, they may be within their rights to sue you for negligence, depending on the circumstances of the accident. Liability insurance protects you financially from the impact of a lawsuit.


    How much insurance do I need?

    The amount of insurance you need to buy is an individual matter and one you should discuss with your insurance agent or broker. As a rule, you should insure the structure of your cottage for the total amount that it would cost to rebuild it if it were to be completely damaged in a fire or similar calamity.

    Note that this is different from the current market value of the cottage or the amount that you paid for it. The amount you paid for the cottage or what you might be able to sell it for now has nothing to do with what it would cost to replace it from the ground up. Insuring your cottage for market value may leave you with too little insurance to replace the building or it may end up causing you to pay more for insurance than necessary.

    In addition, you should consider insuring recreational vehicles and equipment separately, especially if they would be very expensive to replace. For liability insurance amounts, your insurance company offers standard levels of liability coverage and you should consult with your insurance professional to help you decide the appropriate amount of coverage.

    Special considerations for cottage insurance

    Although cottage insurance is very similar to home insurance, there are some special differences that you should consider when you look at insurance for your cottage. Most of these differences have to do with the fact that you do not occupy your cottage full time all year round. This makes your vacation property vulnerable to certain perils to a greater extent than your primary residence.

    Here are some of the differences:

    1.     For cottages, burglary is covered but theft may not be covered. Essentially what this means is that to receive compensation for the theft of your belongings, you must prove that your cottage was forcibly broken into. So, for example if you left your boat tied up on your dock, went home for a week and came back to find it gone, you wouldn’t be able to claim the cost through your cottage insurance policy.

    2.    Certain structural issues may not be covered. For example, if the roof of your cottage were to collapse due to snow accumulation during the winter, you likely wouldn’t be able to claim the cost through your insurance policy. The same thing applies if the water pipes should burst during the winter season. The reason for this is that during large parts of the year no one is at the cottage to take action on potential problems like this and therefore these problems are less preventable and potentially more expensive to repair than similar perils in your primary residence.

    3.    Other exclusions. Cottage insurance policies usually come with a longer list of exclusions than standard home policies. For example, cottages aren’t covered for damage due to sewer backup, nor are they insurable for items that are kept outdoors such as garden equipment, fences or outdoor plants, trees and shrubs.

    4.    Detached structures. Some vacation property policies offer limited coverage for buildings on your cottage property such as stand-alone garages, sheds or boathouses. You can also buy additional coverage for these structures if you feel it is necessary.

    Be sure to speak to your insurance agent or broker if you have any specific questions about insuring your cottage or vacation home. When you know your property is properly insured against the most frequent problems that can occur, it makes it that much easier to enjoy your vacation time. You deserve nothing less than a peaceful, relaxing, stress free summer!