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COVID-19 and seasonal properties

By HUB SmartCoverage Team on September 13th, 2020

Do you own a cottage or seasonal property where COVID-19 has changed the way it’s being used?

You may want to talk to your broker.

If the pandemic has affected your ability to enjoy it, this could constitute a material change in risk, said Greg Robertson, president of Robertson Insurance Broker Ltd., in an interview with Canadian Underwriter. He has clients in both the U.S. and Britain it has affected this summer.

“We’ve got a few U.S. citizens who have family in Canada and the family are using it and that works perfectly fine. But we have others where nobody is using it and they are going to sit idle for the foreseeable future — six months or 12 months potentially,” said Robertson.

COVID-19 was declared a pandemic March 11 by the World Health Organization resulting in many travel and border crossing restrictions. The Canada-U.S. border, for example, is closed until at least Sept. 21 to all but essential workers and that could be extended in order to contain the spread of the virus. That means both Canadians and Americans having cottages in the other country are unable to get there.

“Those are material changes that should be discussed … to make sure that (insurers) are aware and see if they can make a concession based on measures that the property owner is taking.”

Plan to protect property

A plan of action to protect an unoccupied property, for example, could include things such as someone checking on it while vacant or having a property management company oversee it.

Brown said whether it is a material change in risk depends on the insurer’s policy wording and the owner’s policy. As a result, insurers have different expectations when they consider a property to be vacant or unoccupied.

“These issues are surfacing and they have to be dealt with,” Robertson said in the interview.

Pete Karageorgos, director of consumer and industry relations for Ontario at the Insurance Bureau of Canada, said any time a residential property is vacant and no one is living there — as opposed to the occupants being away for a weekend or on vacation — there is a greater risk for crime and damage because no one is there.

“That is a concern and always has been a concern for underwriters,” said Karageorgos in an interview with Canadian Underwriter.

Robertson said most companies have been “pretty good” about COVID in “understanding it is outside the consumer’s ability to get here to use the property.”

“For the most part, as long as they are displaying a plan of action to protect the property they are working with them,” he said.

Recreational property basics

When it comes to cottages, insurers take into consideration how frequently your property is used, how often it is occupied and if it is rented to others. Most will consider insuring your cottage only if they insure your primary residence.

A secondary property can be listed on an owner’s home insurance or have its own standalone property. Recreational property insurance is normally provided on a named perils policy as opposed to a comprehensive or all risk policy. Named perils provide insurance for specific risks: explosions, fire, smoke damage.

Other types of coverage, such as water damage or vandalism may be more expensive or harder to arrange because the property is only occupied part time. Common exclusions can include septic backup and flooding and fuel oil release, to name a few. There’s also a need for third party liability coverage in case someone is injured on your property or you damage a neighbour’s property.

As the owner, you can also consider insurance of contents that remain at the cottage, detached private structures (such as a garage or boat house) and watercraft.

Bottom line? Talk to your broker to make sure you’re properly covered during the pandemic.

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