Cottage Q&A: Renting and liability

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This year we will be renting out our cottage. How much insurance should we get? I’m concerned about being sued.—Annie Montrose, via email

Please stop worrying. Because it’s not likely. “The percentage of policy owners who actually get sued is very low,” says Jamie Martyn, the president of Kennedy Insurance Brokers in North Bay, Ont. But, “you don’t want to be that person who does get sued.” And you sure don’t want to be that person who does get sued and doesn’t have insurance.

First step: contact your insurance company, and let it know that you’re planning to rent out your cottage. Your current coverage may not be enough—some companies don’t even cover short-term rentals. Along with coverage for a loss to the cottage (what if a renter causes a fire?), you’ll want third-party liability insurance. “We say to our clients, ‘No less than $2 million,’ ” says Martyn. Of course, you really can’t go wrong with more, he adds. “What if you’ve rented to a doctor making half a million dollars a year, and he falls off your deck? That loss of income is going to add up.” Even if a lawsuit is frivolous, “you’d have to pay the defence costs,” says Martyn.

Meanwhile, anything you can do to make your property safer will help to protect you from a potential suit. For example, make sure the railings are to code, your swim dock (or raft) is properly marked with No Diving signs if the water is shallow, and your smoke and CO detectors work. You should do all this stuff anyway, but renting opens you up to more risk. The more people who are using the cottage, the more likely that something could go wrong.

Beyond that, “don’t give anyone a reason to be mad at you,” says Jay Simpson, the owner of A Shuswap Holiday in Lee Creek, B.C. “Over-deliver and you’ll never have problems. In my 25-year experience with cottage rentals, we’ve never had any of our owners sued.”

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