Avid cottage enthusiasts may benefit from some of the “bells and whistles” offered in a standalone policy, as opposed to simply attaching their recreational homes to existing homeowner policies, according to a lifestyle insurance expert at Aviva Canada.
Benefits of a standalone policy include coverage for short-term cottage rentals, buildings constructed in or on water (such as boathouses or docks), damage caused by wildlife, island properties, and even hot tubs or sheds.
Whether the insured has a cabin in the woods, an island cottage, waterfront cottage, log construction cabins or more, standalone policies offer tailored coverage for customers who own the cottage or cabin year-round or for seasonal use, says Aviva Canada’s lifestyle product development manager, Michelle Ng.
In one example of a tailored coverage, a demographic shift has changed the way people use their recreational properties, creating the rise of short-term rentals, Ng observes.
“The demographic has really changed in the cottage and cabin environment,” she says. “The demographic used to be mostly retirees. Now, cottages and cabins are purchased by young families and couples who are purchasing it to enjoy it for themselves as part of their lifestyle. At the same time, when they’re not using it, they may be looking to recoup some funds by renting it out for a period of time during the policy term.”
This is where the rental coverage in a standalone policy really comes in handy, Ng says.
By way of example, she says a standalone cottage and cabin policy offered by Aviva includes rental income protection if the cottage or cabin cannot be rented out after a covered claim. This kind of endorsement applies only to buildings used for recreational purposes; for a business operation, a commercial policy would be more suitable.
In the cottage and cabin standalone policy, an insured can choose to rent out their cottage or cabin with a short-term rental endorsement for up to 30 cumulative days a year. For a surcharge on the premium, the client can add more days of rental coverage, up to 180 cumulative days per policy term.
Standalone cottage and cabin policies may also cover buildings or structures that you would find in or upon water — for example, boathouses or docks. An additional endorsement on the policy includes coverage for small and lower-valued boats with relatively low outboard motor horsepower (no more than 140), other types of motors less than 260 horsepower, intended for motors that travel at speeds of 50 mp/h or lower. The endorsement covers damage to the boat, motors, miscellaneous equipment, and the trailer. (Boat insurance would provide more specialized coverage for other types of watercraft.)
Another example of coverage you would find only in a standalone cottage or cabin policy is for damage caused by bears, raccoons and squirrels. Plus, standalone coverage for docks, hot tubs and sheds may not be typically be available when it is attached to the homeowner policy.
And then there are the isolated island properties.
“Whether or not a carrier will attach a recreational property to a homeowner policy depends in part on location,” Ng says. “For example, some cottages and cabins are on islands and only accessible by water and this may not be risks that some carriers will accept with the homeowner’s insurance.
“In a situation like this, the cottage or cabin may not have year-round road access and is not serviced by a responding fire hall. Island cottages and cottages accessible by water are acceptable in a standalone product.”
While all of these benefits typically come with standalone policies, Ng notes some advantages to having a recreational property attached to the homeowner policy instead of buying separate standalone coverage. For example, it may be easier for a broker to add a cottage or cabin directly to an existing homeowner policy that the broker has already placed, as opposed to filling out an application for a brand-new standalone policy.
“Some cottage or cabin owners may not feel the need for all the frills, bells and whistles [offered by a standalone policy],” says Ng.