When it comes to insuring your second home, whether it’s a cottage, rural property or rental property, you want to ensure it is totally covered.
While law does not mandate home insurance, it does protect you from having to pay large sums of money should anything happen to your property, whether it’s your primary residence or a second home.
If you have a mortgage on the property, your financial institution will include a mandatory requirement that the building(s) are insured. It is a condition of the mortgage application.
As you consider second home insurance you will need to consider such important factors as:
- the amount of use your second property gets,
- whether the property has detached buildings that will also require protection,
- the value of the buildings and contents and,
- whether or not the property is being used as a rental.
The insurer of your primary residence can, typically, add your second home on your existing property, though insurance for second or seasonal properties does work differently than insurance for your primary home. Your second home insurance can also be purchased as a separate stand-alone policy.
According to the Insurance Bureau of Canada there are additional risks associated with part-time occupation compared to full-time occupation. As such, these properties are generally insured on a named perils policy – including coverage for such perils as fire, wind and theft – versus a comprehensive or all risks policy – which is the most inclusive home insurance policy, covering the building and its contents for all risks other than those specifically excluded.
Typical exclusions in second homes include damage/loss of: fences, garden equipment, outdoor plants, trees and shrubs, as well as food in freezer.
If the second home you are covering is a recreational property, such as a cottage, you’ll want to ensure that you also have third party liability coverage to protect you if someone is hurt on the property. It will also offer protection should your evening fire accidentally spread to and damage neighbouring properties.
Also remember that if you have a boat or any type of watercraft at your cottage that you may need additional coverage for that as well.
If your second home is a rental property you will also want to consider landlord insurance and may also want your tenants to have tenant insurance to ensure they, you and your property are totally covered.