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What Kind of Insurance Do You Need for a Vacation Property?

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For your cottage or vacation property, it’s easier to buy a named perils home insurance policy—one that kicks only when specified incidents occur—than a comprehensive policy.

While coverage for fire and explosions are standard, it can be harder or more expensive to insure risks such as vandalism, theft and water damage. That’s because vacation properties are often left empty for long stretches of time, and while neighbours may notice a fire, it’s a lot harder for them to spot a thief slipping away with the new kayak or to learn the basement is flooding. And if nobody catches that burst pipe until the next long weekend, the repairs are going to skyrocket.

Insurance policies for vacation properties also take into account where your home is located. If it’s right in town, no problem. But if the property is remote—on an island, in the middle of a provincial park or lacks year-round road access, for example—expect premiums to increase. If anything goes wrong and you’re a 90-minute drive from the nearest fire hall, a grease fire could burn down the entire building—and some nearby trees—before you could even hear the firefighters’ sirens.

If your cottage relies on wood stoves or fireplaces for heat, you’re also more at risk for fire damage and may have to pay higher premiums.

And don’t forget to read the fine print in your policy documents. Some insurers require someone to visit the property every month or season to make sure safety mechanisms are in place. If you don’t and an accident happens, the insurance company may not pay for the damages.

If your vacation home is more luxurious than rustic, your policy might not cover everything in and around the property. Check with your insurance provider to see if you need to buy additional coverage for toys like sailboats, canoes, and snowmobiles, as well as for separate structures like boathouses, bunkhouses, and garages. And make sure your policy has sufficient limits for contents. Anything you bring to and from the vacation home is covered by your home insurance policy from your main residence, while anything left there year-round needs to be covered by the vacation home’s policy.

If, on the other hand, your vacation home is a real fixer-upper, third-party liability coverage is more important than ever. That way, you’re protected if guests trip down the half-rotten staircase or if you break your neighbour’s window while working on some repairs.

Another issue to think about is whether you want to rent out your vacation home at all. For some insurers, this is strictly verboten, and doing so could cancel your policy. Other insurers will let you rent out the property for a set amount of time each year—between six and 12 weeks are common—but that can increase your premiums by as much as 25%. If you want the ability to rent it out as often as you like, you may have to buy commercial insurance—like a bed and breakfast would need—and those premiums can be almost double.

To estimate your insurance costs, get a home insurance quote.

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Flickr: Miika Silfverberg