My family is considering renting out our cottage when we aren’t using it. We will be using a rental agency. The cottage is insured for liability and fire for family use. Should we take out insurance for rentals separate from that offered by the rental agent?—William Prest, via email
Well, you shouldn’t rely on it. Not without investigating whether or not your current coverage is going to be enough now that you’re renting out the cottage. Turning your place into a rental changes the risk game—for you, and for your insurance company. So, your first step is to update them. (That would be the case no matter the situation, whether you’re renting the cottage privately or through a professional agency.)
“It’s imperative that you inform your insurance provider that you’re participating in short-term rentals,” says J.T. Lowes of All-Season Cottage Rentals in Haliburton, Ont. If you don’t, and something happens—a fire, say, while a renter was in the cottage for the weekend—there could be repercussions, he says. Your claim could be denied.
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You obviously don’t want that. “There are two components to cottage insurance for someone who is renting their cottage, be it for long- or short-term,” says John Zehr, the president of Zehr Insurance Brokers in New Hamburg, Ont. “One is for the direct loss or damage to the building and its contents, and the indirect loss of income, which results from that direct loss or damage,” he says. “If the cottage is lost to fire, for instance, it could take a year or more until it’s restored or rebuilt. The subsequent loss of income could be a challenge for someone who needs to meet financial obligations for the property,” says Zehr. “The other, if not most important, consideration for a rental cottage insurance policy is the liability insurance.” This would cover you in the event that the renter is injured, or if their items are damaged. (We’ve said it in Cottage Q&A before: anybody can attempt to sue for anything.)
“Even if the owner is not contributory, but the injured party suggests that they are, the liability insurance will cover investigation and legal defence costs,” says Zehr.
Cottage Q&A: Liability insurance for a remote cabin
Don’t worry too much: lots of people rent out their cottages and never have to file any kind of claims because of it. And nobody’s knocking what a rental agency might offer. It’s just that you’re better off treating that coverage as an extra, backup form of insurance instead of relying on it entirely, says Zehr. “If I were a cottage owner, I would far rather disclose everything to my own insurance company to ensure I’m covered in my own right.”
Got a question for Cottage Q&A? Send it to answers@cottagelife.com.
This article was originally published in the May 2025 issue of Cottage Life.
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