Can I insure a cottage I rent out on Airbnb or VRBO in Ontario?

The short-term rental market has transformed how many Ontario cottage owners use their recreational properties. Platforms like Airbnb and VRBO have made it straightforward to rent your cottage when you are not using it, generating income that can help offset ownership costs. However, the insurance implications of rental activity are frequently misunderstood — and the consequences of getting it wrong can be severe.

Why Standard Cottage Policies Exclude Rental Use

Standard cottage insurance policies are underwritten based on the assumption that the property is used by the owner, their family, and occasional guests on a non-commercial basis. Rental activity introduces risks that standard policies are not priced to cover.

Paying guests treat a property differently than owners. They are less familiar with the property’s systems, less likely to notice developing problems like a slow leak or a malfunctioning appliance, and statistically more likely to be involved in incidents that lead to liability claims. They may use waterfront features — docks, boats, swimming areas — without the same awareness of local hazards that an owner develops over years.

The liability exposure alone is significant. If a paying guest is injured at your cottage — a dock fall, a diving accident in shallow water, a fire caused by misuse of a wood stove — and your policy does not cover rental activity, you could face an uninsured liability claim. Similarly, if a paying guest causes damage to the cottage or a neighbouring property, your standard policy may not respond.

Most standard cottage policies contain a specific exclusion for commercial use or rental activity. Even occasional rental — a single week per summer — technically triggers this exclusion. If you file a claim while renting or shortly after a rental period, your insurer may investigate whether the damage is related to rental activity, and a denial is possible if rental use was not disclosed.

Rental Endorsements and Commercial Policies

The solution for cottage owners who rent their property is disclosure and appropriate coverage. Our guide to renting your cottage on Airbnb covers this in detail, but there are generally two approaches, depending on how frequently you rent.

Rental endorsement on a cottage policy is the most common approach for owners who rent their cottage occasionally — typically fewer than 90 to 120 days per year. The endorsement modifies your standard cottage policy to cover the periods when paying guests are occupying the property. It typically extends liability coverage to incidents involving guests, may increase the liability limit, and may include loss-of-rental-income coverage if a covered loss makes the cottage uninhabitable during a booked rental period.

The premium increase for a rental endorsement varies by insurer and rental frequency but generally falls in the range of 15 to 30 percent above the base cottage premium. This is a modest cost relative to the exposure it covers.

Commercial rental property insurance may be required if your cottage is rented full-time or for the majority of the season — essentially operating as a vacation rental business rather than an occasionally rented personal cottage. Commercial rental policies are underwritten differently, with higher liability limits, business interruption coverage, and potentially different building valuation methods. Your broker can advise whether your rental frequency warrants a commercial policy.

Disclosure Is Non-Negotiable

The most important step is full disclosure to your insurer. When applying for or renewing cottage insurance, you must accurately describe any rental activity — past, current, or planned. This includes:

• How many days or weeks per year you rent the property
• Whether you use a platform like Airbnb or VRBO, or rent privately
• Whether you have a rental management company handling bookings
• The maximum occupancy you allow for rental guests

Failing to disclose rental activity is a material misrepresentation that can void your entire policy — not just the rental-related coverage. If a fire destroys your cottage and the insurer discovers undisclosed rental activity during the investigation, the entire claim could be denied.

Luca at InsureMyCottage.ca helps Ontario cottage owners find the right coverage for rental properties across Muskoka, Kawartha Lakes, Haliburton, and beyond. Call 705-996-1116 to discuss your rental cottage insurance needs.