Cottage insurance in Ontario: costs and catches

Insurance is the cottage cost that has surprised cottage buyers most in the last couple of years. It is also one that can quietly stall a purchase, because your lender will not fund the mortgage until the cottage is insured. Here is what drives the price and how to avoid last-minute stress.

What cottage insurance costs in Ontario

Insurer and broker guides commonly put Ontario cottage insurance at about $800 to $3,000 or more per year. That is a wide range because cottages are so different from each other. A winterized place on a ploughed road near a full-time fire hall sits at one end. A wood-heated, water-access cottage far from fire services sits at the other.

Get an insurance quote for the exact property and intended use during the conditional period. Ask about fire access, heating, vacancy, freezing, water damage, rental guests, deductibles and exclusions. Another owner’s price or coverage cannot predict yours.

What drives the price

• Heat source. Wood stoves are the big one. A wood stove as the main heat source can raise premiums a lot, and some insurers will decline.
• Fire protection. Distance to the fire hall, whether firefighters are full-time or volunteer, and whether there is a hydrant nearby.
• Access. Water-access and island cottages are harder for fire crews to reach and often cost more to insure.
• Use. Seasonal and year-round cottages are rated differently.
• Rentals. Renting the cottage out changes the risk, and coverage varies by insurer.
• Claims history and the building itself: age of the roof, wiring, plumbing and heating.

Wood stoves and WETT inspections

If the cottage has a wood stove or fireplace insert, expect the insurer to ask for a WETT inspection or certificate. WETT stands for Wood Energy Technology Transfer, and a certified inspector checks the installation, clearances and chimney. Ask the inspector for a written quote. Book it during your conditional period so the result is in hand before you firm up.

Vacancy and freeze rules

Seasonal cottage policies usually come with vacancy or unoccupancy conditions and freeze protection rules. A common example is that you must either keep the heat on or shut the water off and drain the lines. Freeze damage is a common exclusion when those steps are not followed.

The exact rules, including how many days the cottage can sit empty, differ by policy. Read your wording carefully and ask your insurance broker to explain it in plain language. Do not rely on a number you heard from a neighbour.

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Buying a cottage and worried insurance could hold up closing? Talk to us early and we will line up the timing with your lender.

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Insurance if you rent the cottage

If you plan to rent the cottage, even for a few weeks, tell your insurer before the first guest arrives. Some policies include limited short-term rental coverage and offer add-ons for more. Others need a separate policy. Some municipalities also set their own rule: the City of Kawartha Lakes, for example, requires short-term rental operators to carry $2 million in liability insurance.

What your lender needs at closing

Every lender requires the cottage to be insured before the mortgage funds, with the lender named on the policy. Your lawyer will ask for proof a few days before closing. On a cottage that is harder to insure, such as one heated only by wood, on an island, or far from fire services, finding coverage can take longer. Start shopping as soon as your offer is accepted.

How to get a fair quote

1. Get the seller’s current insurer, premium and any past claims if they will share them.
2. Collect details: heat source, roof age, electrical panel, plumbing, distance to fire hall and road access.
3. Book a WETT inspection for any wood-burning appliance.
4. Ask an insurance broker to shop several insurers, and ask what would lower the price, such as a monitored alarm or a different heat source.
5. Add the quote to your yearly cost budget.

Our take

Insurance is now a real line in the cottage decision, not an afterthought. Quote it during your conditional period, build it into your annual cost, and if the cottage turns out to be hard to insure, that is useful information before you commit. We are always happy to help you plan the timing at get started.