No matter what you call it – your cottage, cabin, camp, chalet, lakeside getaway – it’s your home-away-from home; a sanctuary to escape from everyday stresses. It’s a place to decompress, reconnect with the land and create a lifetime of wonderful memories with your friends and family. But often, when it comes to adequate insurance, a lot of cottagers drop the ball. Perhaps they can’t imagine the possibility of catastrophe hitting their place of tranquillity. Unfortunately, catastrophe doesn’t discriminate and all cottage insurance policies are not the same.
To help protect you and your retreat, we spoke with Allstate Canada’s Risk Management Specialist team, to learn what a cottage owner should look for and ask a potential insurer regarding their cottage insurance policy.
What do I need to consider when looking for a cottage insurance policy?
1. What are the limitations of seasonal home coverage?
There is typically a higher risk — and therefore cost — associated with seasonal use than with a dwelling that you live in year round. Damage can often become worse when no one is around to notice a problem, or to provide upkeep and make timely repairs. In most cases, seasonal home insurance is provided as a “Named Perils policy,” which provides coverage for only specific perils named in your policy (such as fire, explosion, or smoke damage). To figure out what’s best for you, find out what is and isn’t covered and determine what’s most relevant to your situation.
2. Do I have to have my home insurance with the provider in order to get cottage insurance?
Many companies require you have home insurance with them before they will insure your cottage. There are exceptions though; speak with your insurance provider before you proceed.
3. If my cottage is on an island or another remote location, does my policy cover any increased costs of debris removal, material delivery, etc., due to loss?
While the idea of an island cottage sounds great, it can be a tricky proposition. You may have difficulty finding an insurer for your remote retreat since these sorts of cottages are not as common. Building a cottage in a hard-to-access area can be costly since transporting materials and labour out to the location may increase repair and rebuild costs. If you’re thinking about purchasing an island cottage (or already own one) and are looking for insurance, be sure to let your potential insurance provider know the cottage is on an island, or another hard-to-access area. This is an insurance specialty and you want to ensure you’re properly protected.
4. Am I covered if I rent out my cottage under a standard policy?
Before you rent your cottage out to others, check with your insurance provider to ensure renting is allowed under your policy. Many policies do not allow for renting and doing so under a policy that doesn’t allow it could have unfortunate consequences in the event of a claim that results from this activity (i.e. you may not be covered for damage that occurs while renters are there). Some insurance providers do allow a certain rental period, but the length of this period varies. If you plan to rent out your cottage, check with your insurer to be sure you’re covered, and learn what your allowable period may be.
Insurance policies are not the easiest documents to read, but it’s important to familiarize yourself with your policy.
5. Does my policy include the Replacement Cost on the building(s) or the Actual Cash Value of the building(s)?
This question is an important one, and it will determine how much you will be out of pocket if you need to rebuild or repair your cottage as a result of a fire or other damage. You may have paid $75,000 for your cottage 20 years ago, but you can be sure it will cost much more if you need to rebuild it today. Ideally you want to get a policy that offers replacement cost. Take into account the size of your type and size of the cottage, exterior and interior construction materials, such as flooring.
Always advise your insurance agent of any material changes you make to the cottage, such as renovations or major updates to ensure the policy rebuild value stays up to date. You may even save money on your premiums if the updates make the home safer and more secure.
6. Are there any specific requirements I need to be aware of in order to ensure I get the full benefits of my cottage policy if needed?
It would be devastating to learn your cottage is not covered for a loss because you failed to meet a specific policy clause that you would have met had you known about it. For example, some policies stipulate you must make regular visits to your cottage throughout the year. Insurance policies are not the easiest documents to read, but it is important to familiarize yourself with your policy. Asking your insurance advisor about any specific requirements to your situation is important, and make sure you can follow through with them.
7. Are my outbuildings, such as a dock, garage or boathouse covered by my cottage insurance?
Some insurance packages include a limited amount of coverage for outbuildings. Make sure you find out what is and isn’t included. This information is often covered under the Detached Private Structures portion of the policy. Also talk to your advisor about any exclusions or special endorsements you can add on as additional coverage to ensure you are adequately protected, such as damage due to things like ice build-up or overland water.
8. Are my boats and other water toys covered under my cottage policy?
Make no assumptions. You want to protect all your assets. Find out what is covered, if there are limitations, if you require additional coverage, and any possible exclusions. Most items such as motorized boats and ATVs require additional or separate coverage. In some cases, policy additions (like adding a boat policy to your property policy) can result in savings through bundling of items.
9. What is contents coverage? What are the limitations and how would cottage content claims be settled?
Like home policies, some cottage property policies will automatically include the items inside your cottage (contents) up to a certain limit. This coverage applies to contents permanently kept at the cottage, like beds and other furniture (anything you bring back and forth, such as clothing, will be covered by your primary home insurance policy). Additional coverage may be purchased if needed, so be sure to discuss contents coverage with your provider, along with how claims would be settled. Creating and maintaining a home inventory of your contents will help expedite the claims process.
10. Do I need third party liability?
Always get third-party liability coverage. This will help protect your in case someone gets hurt on your property or you somehow cause damage to neighbouring properties.
Just remember, every situation is different, and policies vary. Don’t be afraid to ask a lot of questions and be sure you understand your coverage.