So you have decided to rent out the cottage...

So you have decided to rent out the cottage for part (or all) of the summer. Great idea! But have you notified your insurance company? Failure to do so can cause you major problems in the event of a claim. To an insurance company a property that is rented usually presents a greater risk than one that is owner occupied. Failure to advise your insurance company that the property is rented could result in a claim being denied based on what is known as a "material change in risk." Similarly, if you are placing insurance on your cottage and you plan to rent it out, failure to advise the company or the broker of your intention to rent could be considered a "material misrepresentation" which could provide the company with an out in the event of a claim. If there is a period of time when the property is vacant be sure that you have it checked on a regular basis. Some policies will be considered void if the property is vacant or unoccupied for a specific period of time. Any lengthy vacancies should be reported to your company or your broker to ensure there is no lapse in coverage. If you do have someone check your cottage on a regular basis, make sure the dates when that person checks the cottage are recorded.

If you are renting out the cottage with boats or other watercraft will your policy cover you in the event of a claim arising from a boating accident? Some policies specifically exclude coverage for accidents involving watercraft and it is necessary to obtain separate or additional coverage. Again, to be sure, check with the company. Remember that as the owner of the property you may be held liable for an injury not only to your tenant but to anyone visiting the cottage. Don't find yourself in the position where a claim is being denied due to misrepresentation or non-disclosure. Advise your company or broker of any changes in the use of the property. Do this in writing and keep a copy of the letter. Hopefully, you will never have to worry about a claim being denied. But, if it happens, and you have the paper to show you gave the company notice, you will be paid and will avoid a lengthy and expensive legal battle. Have a safe and happy summer.

Alf Kwinter
Singer, Kwinter