Renting out your cottage or cabin for use by other parties is a great way to help offset the costs of vacation or seasonal property ownership. However, if you choose to rent out your cabin or cottage regularly, you’ll need the right kind of rental property insurance to ensure your possessions and interests are protected. Basic, bare-bones home insurance coverage may not provide all the protections you want or need, so the first thing you should do before you rent out your property is discuss your current coverage with your Calgary insurance agent or broker. You will likely need to make changes to your policy.
What Your Rental Property Insurance Policy Should Cover
Any time you rent out your property for use by other parties, you are essentially becoming a landlord and you need to protect yourself like one. Even a comprehensive home insurance policy for your cabin or cottage may not provide you with all the coverage you need. The four most important additional items your rental property insurance policy includes are:
- Liability protections for tenants, in case they suffer personal injuries during their stay.
- Property damage and property loss protections for any items you own which are available for tenants to use during their stay (e.g. furniture and entertainment systems).
- Coverage for potential disasters, including fires, floods, and weather-related accidents.
- Protections from property damage or loss due to theft, vandalism, or tenant negligence.
You may also need to extend your coverage to protect any outlying buildings or structures on the property, including sheds, boat houses, boating docks, and guest houses.
Types of Rental Property Insurance Policies
There are two basic types of rental property insurance policies to choose from:
- Policies which provide continuous coverage throughout the year
- Seasonal policies, which cover property rentals within a specified time frame
Here in Alberta, many cabin and cottage owners find opportunities to rent out their second properties year-round. During the winter, the area attracts skiers and snowboarders from all around the world, and hanging out at your Alberta cabin is an extremely popular summer pastime. However, depending on your situation, you may only require rental insurance for the winter or the summer months, which will then only cover you for a specified time frame. Seasonal policies cost less, but don’t rule out the possibility that you may want to rent out your cottage is the off-season. It’s possible you could get a repeat customer!
Speak to an insurance advisor or broker if you’re uncertain which type of coverage would be right for you.
What You Should Disclose to Your Tenants
When you present prospective tenants with the rental agreement, you should be up-front in disclosing what your rental property insurance does and does not cover. Sometimes, tenants make the mistake of assuming that they are completely covered under your policy, when they in fact may not be.
Always tell tenants up front if:
- Your policy does not cover their personal property.
- Your policy does not cover injuries to or damage caused by their guests or visitors.
- Your policy does not cover damage caused by your lessors.
- There are any other conditions or limitations in your coverage that may affect the tenant’s ability to file a claim under your insurance.
If any such limitations exist, it may be necessary for your tenants to purchase their own supplemental insurance to cover their belongings (especially if they have expensive sports equipment with them), and also ensure you won’t be left holding the bill if your tenants or their guests damage the building or its contents.
As a final safety measure, it’s also a good idea to provide your clients with instructions for the proper operation of any appliances or equipment. This protects you from any potential liability if the appliance is misused, and it also greatly diminishes the risk of an accident or fire.
At Lane’s Insurance, we offer a wide range of flexible, affordable rental property insurance policies to clients looking to rent out their cabins or cottages to vacationers. Visit us online to get a free, no-obligation quote, or call 1-888-330-9729 if you have any questions.
