Our team reviewed Insurance Bureau of Canada’s seasonal-property guidance, home-coverage guide, wildfire claim guidance, and the federal home-insurance guide. Here’s what we found:
The answer depends on many factors, including how you plan to use the property, how accessible it is, and whether you plan to rent it out.
Depending on its classification, you could insure your second property either on its own with a standalone policy or by adding it to an existing home insurance policy.
Keep in mind that not all risks are treated the same on a primary and second home, including fire/water coverage, earthquake, contents, detached buildings and liability coverage.
Also, disclose periods when the home will be vacant and any rental use.
What Insurance Do You Need For A Second Home?
Insurance Bureau of Canada states that a vacation home may be added to your home policy or may require a separate policy, depending on factors such as construction, utilities, accessibility, fire protection, whether it will be rented, how it is used, and the insurer’s underwriting rules.
Your insurer may insure a summer cottage differently than a property you live in during part of the year, rent out for extended periods, rent out for short-term stays, or don’t use at all. Tell them when and how long you’ll be there, how often you’ll check on the place, who stays there and whether anyone pays to use it.
How Should You Classify The Property?
| How the property is used | Likely insurance conversation | Facts to disclose |
|---|---|---|
| Personal use, year-round access | Coverage for a second home: separate policy, or add to main policy. | Frequency of stays, heating, road access and checks |
| Personal use, seasonal access | Seasonal or cottage policy, often with named-perils limits | Months used, winter closure, utilities and protection |
| Long-term tenant | Landlord or rental- property coverage | Lease, occupancy, rental income, furnishings and tenant insurance |
| Short-term paying guests | Explicit short-term-rental or commercial permission | Rental days, whether it’s through a platform; services; guest turnover; local regulations. |
| No occupants and contents removed | Vacant-property coverage may be required | Reason, duration, renovations, utilities and inspection plan |
Read More: See When a Vacant or Unoccupied Home Needs Different Coverage
What Is the Difference Between Insuring a Primary and Secondary Residence?
Insurers consider risks associated with the property itself, such as distance from the fire department, private or seasonal roads, intermittent heating, septic tank, and well water, as well as occupancy, since secondary homes are unmonitored for longer stretches of time or shut down for the winter. These factors can affect eligibility, covered perils, settlement basis, deductibles and cost.
In addition, seasonal/secondary policies may be written on a named-perils basis, which means insurance applies only to specific, listed causes of loss. Homeowners should not assume secondary residence insurance is the same as primary residence insurance, and should carefully review policy coverage. Comprehensive coverage, replacement cost, and the same limits as a primary home may not be available.
Coverage To Check Before You Buy
Fire, Wildfire, Flood, Earthquake And Ground Movement
The IBC says fire damage is generally included in homeowners’ insurance, including wildfire damage, but consumers should read their policy terms.
The FCAC states that damage caused by overland flooding and earthquakes may not be included in a standard home insurance policy. These coverages may be available as an option. Terms, conditions, deductibles, and even the availability of endorsements may vary by location and insurer. Sewer backup may require additional coverage that may be restricted for seasonal properties. Damage caused by landslides and ground movement may be excluded or difficult to insure. Check your policy, as earth movement differs from earthquake damage.
Read More: Review Wildfire Insurance for a Canadian Second Home
Rental Use Changes The Risk
Landlord insurance is designed for tenant-occupied homes. If you want to allow short-term guests, you may need your insurer’s approval or a different type of insurance.
Loss-of-rent coverage typically applies when your rental becomes uninhabitable because of an insured event. Unless your policy says otherwise, it doesn’t cover a tenant’s failure to pay, government-mandated closures, a slow rental season, or general maintenance costs.
Finally, if you use a rental platform, don’t count on the company’s protection plan as a substitute for your own insurance. These plans may come with coverage limitations and exclusions, claim processes, and other liability provisions.
Read More: Compare Landlord Insurance With Standard Home Insurance
Absence And Winter Duties
Ask your insurer how often someone must inspect your property while you’re away, what documentation is required, and whether neighbour checks count. If your policy includes an absence warranty, keep a log of inspections with dates, maintenance with receipts and photos.
During freezing weather, if your property will be unattended, find out what precautions are necessary, including maintaining a certain level of heat, draining or shutting off the water supply. Leak detection devices, automatic shutoff valves, and monitored alarms can help, but they are additional precautions and don’t replace those required by your insurance policy.
Give your insurer advance notice before leaving for an extended period, remodelling, disconnecting utilities, if your address becomes inaccessible by road, or before switching between personal and rental use.
Can I Get A Discount When Insuring My Second Home?
Ask about discounts for adding or bundling a second home with an existing policy, adding monitored alarms, water leak detection, or automatic water shutoff, updating electrical or heating systems, or increasing the deductible.
However, none of these necessarily qualify for a discount, and some, such as alarms, may require monitoring/maintenance.
Beware of an apparently lower premium. This may reflect reduced coverage such as actual cash value, not replacement cost settlement; named perils, not comprehensive coverage; higher deductibles; no water or rental-income coverage or lower coverage limits for contents, outbuildings. Make sure you’re comparing similar terms and conditions.
Second-Home Quote Checklist
- Who will be using the secondary property?
- Frequency of occupancy
- Will any guest staying at the secondary home pay?
- Year-round or seasonal road access?
- Distance to fire protection?
- Type of heating system? Primary source of water?
- Condition of septic tank/system? How is it configured?
- Condition of roof, electrical, and plumbing systems?
- Any wood-burning or -heating sources? Oil/propane tanks?
- Loss history on property?
- Winterization process? Frequency of visits for maintenance/inspection?
- Replacement cost of contents? Detached structures?
- Is there rental income that would need replacing?
- Which perils to cover? Which exclusions apply?
- Basis of settlement? Deductibles?
- Are dock/watercraft covered? RVs?
Read More: Explore Cottage Insurance Options