Vacation Home & Cottage Insurance

Vacation Home & Cottage Insurance

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated May 2, 2022

Vacation properties are spiking in popularity among Canadians as they seek to retreat to a home away from home during summer holidays, winter vacations, and the odd weekend getaway.

If you own another property, you’ll need some form of insurance on it. Much like your primary residence is insured, you’ll require an insurance policy for your second home.

Known as vacation home insurance, this type of policy will provide similar protections that your primary residence insurance policy offers. 

What Is Vacation Home Insurance?

Also referred to as cottage insurance, vacation home insurance is a specific type of policy that protects a home that is not considered your primary residence. 

No matter how much time you may spend in the home, you will need some form of insurance on it, particularly if you take out a mortgage to finance it. Much like they do for primary residences, lenders typically require an insurance policy on a vacation home before they agree to approve a mortgage

Types Of Vacation Home Insurance

As you would imagine, different people use their vacation homes in various ways. For instance, some Canadians may visit their vacation properties for just a week or two every year, while others may spend entire summers there. Others still may even rent out their vacation homes, whether on occasion or on more of a regular basis. 

Considering the different uses of vacation homes, the type of insurance policy that you take out should be tailored to how you use the property. 

Vacation Homes That Are Not Rented Out

If your vacation home is used exclusively by you and your family and is never rented out, your insurance provider for your primary residence may allow you to add coverage for your vacation home onto your property insurance policy for your first home. 

This is referred to as seasonal or secondary home insurance. Otherwise, you may be required to take out a second insurance policy. You will need to get in touch with your insurance company to find out what your options are. 

It’s important to note that the majority of conventional home insurance policies do not cover properties that are vacant for longer than a certain amount of time. As such, you’ll want to verify with your insurance provider what your current policy covers based on how often you visit your vacation home. 

Your vacation home will also have to be maintained throughout the year, even during times when you’re not spending any time there. This includes doing things like cutting the grass, shovelling the driveway and walkways, and collecting mail, among other things.

Vacation Homes That Are Rented Out Occasionally

Many Canadians who own vacation homes may choose to rent out their property on occasion to help keep up with mortgage payments. In this case, your standard home insurance policy may cover you. 

That said, there are certain guidelines on how you are permitted to rent out the home. It’s possible that you may require a specialized policy to provide coverage if you rent out occasionally, so be sure to speak with your insurance company to find out how this practice may impact your coverage.

Vacation Homes That Are Rented Out Regularly

While your standard home insurance policy may provide coverage if you rent out once in a while, it will not provide coverage if it is rented out on a regular basis. In this case, you’d need additional coverage in the form of a short-term rental insurance policy or a landlord insurance policy. 

A short-term rental insurance policy is designed to protect homeowners who rent out their homes regularly on vacation rental sites like Airbnb and VRBO. Coverage will typically be added to an existing property insurance policy and can protect you against things such as damage to the home, theft, pest infestations, and so forth. 

A landlord insurance policy is a standalone policy that is designed for those who rent their vacation properties out on a regular basis, whether to short-term or long-term renters. While these types of policies are usually taken out by full-time landlords and property managers, they can also be used by individuals who want to rent out their properties on a part-time basis.

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What Is And Isn’t Covered By Vacation Home Insurance?

Before you take out any type of insurance policy, it’s important that you understand what will be covered and what won’t be. That way you won’t be unpleasantly surprised when you file a claim, only to find out that you won’t be compensated. 

When it comes to vacation home insurance, you will be covered for the following:

Property Structure And Contents

Similar to a home insurance policy for your primary residence, a vacation home insurance policy will usually provide coverage for the structure of the property and all contents within it in the event of damage, natural disaster, or theft. 


This type of policy will also provide coverage for liability in case you are ever deemed responsible for the injury of someone who visits your home or any damage to someone else’s property. In this case, your vacation home insurance policy would protect you from litigation should you ever be sued as a result. 

Named Perils

If you want a specific peril to be covered under your vacation home insurance policy, it will have to be named in the contract. Vacation home insurance usually only covers “named perils” (or risks). Only those perils that are named will be covered, while those that are not named will not be covered. This is different from a typical primary home insurance policy that covers “all perils.”

Further, be sure that certain detached structures are listed in the policy. For example, you may have a shed, detached garage, guesthouse, pool house, or boathouse on the property. If you want these structures to be covered, make sure they are included in the policy.

More specifically, the following perils are typically not covered under a vacation home insurance policy:

  • Trees, bushes, shrubs, and other outdoor greenery
  • Fences
  • Gardening equipment
  • Sewer back-up 
  • Damage from pests
  • Damage from earthquakes or landslides
  • Damage from flooding
  • Damage from burst pipes
  • Damage from intentional acts or negligence
  • Wear and tear
  • Personal liability from operating a business out of the house

Certain issues – such as damage from earthquakes or flooding – would require additional riders or separate policies in order for them to be covered.

Is A Credit Check Required For Vacation Home Insurance?

A credit check is not necessary when taking out a vacation home insurance policy. That said, it could help in some cases. For instance, if you have a very good credit score, you may want to allow the insurance company to pull your credit report and do a credit check, as your high score may translate into lower premiums on your policy. 

Should You Get Vacation Home Insurance?

Whether you own a cottage, condo, or even a ski chalet, you will require a vacation home insurance policy to insure it.

This type of insurance will provide you with peace of mind knowing that the structure and all your belongings within it are covered in case disaster strikes. If that happens, you’ll be financially compensated. 

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Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.

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