Cottage Insurance, Camp Insurance, and Vacation Property Insurance

How’s It Used?

How the vacation property is used and how often it is occupied will dictate which insurance packages are appropriate for you. 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 coverage to buy for your vacation property.

Coverages For Your Vacation Property

Most insurance companies will consider providing insurance for your vacation property only if you insure your primary residence with them as well. You can have your vacation property listed on your home insurance as a “secondary” or “seasonal” location, or you can have insurance for the property as a separate, stand-alone policy.

There is one main difference between insurance for your primary home and insurance for your vacation property: Vacation property insurance is almost always provided as a Named Perils policy, instead of a Comprehensive policy, because of the risk associated with the part-time occupation of the vacation home. “Named perils” means 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, because of the part-time occupancy. For example, if a water pipe bursts or if vandals break into your vacation home while it is vacant, the damage is likely to be more severe because no one will be there to take action.

There are some common exclusions in insurance policies for second homes. These include coverage for sewer back-up and damage to, or loss of:

• Fences
• Food in a freezer
• Garden equipment
• Outdoor plants
• Trees and shrubs

Even if you have a “fixer-upper” and the building is worth little, you will still need to have Third-Party Liability coverage to protect yourself in case someone gets hurt on your property or if you happen to start a fire that spreads to neighbouring properties.

Some other coverages you may want to consider including are:

• Contents coverage: Some vacation property packages provided by your insurance company automatically include contents up to a certain limit. This coverage applies to contents that are permanently kept at the vacation home. (Anything that you take back and forth – e.g., clothing – is covered by your primary home insurance policy.) If coverage provided is inadequate, additional coverage may be purchased.
• Detached private structures: Some vacation property insurance packages include a limited amount of coverage for any outbuildings, including boathouses, garages, or sheds. But you may need additional coverage to ensure that you are fully protected.
• Replacement cost: This type of coverage covers the cost of repairing an item or replacing it with a new one, without any deduction for depreciation.