With housing prices on the rise across the country, families are looking for ways to reduce their living expenses. Adding an in-law suite to your home or property is a great way to keep family members close while making your home more affordable by pooling expenses. An in-law suite can provide a comfortable living space for an aging parent while giving you peace of mind by knowing the parent is nearby. A house that can accommodate multi-generational family members can also benefit busy parents as the older family members can share in childcare duties and other responsibilities.
But what does an in-law suite mean for your home insurance?
In-law suites go by various names, including granny flats, secondary suites and accessory dwelling units. Essentially, they are considered an “accessory” to the primary residence and have their own entrance and living essentials, such as a bedroom, bathroom and kitchen. These separate living spaces can be within the home, such as a basement suite. Or, they could be a separate dwelling on the same parcel of land; for example, a laneway house or unit over a garage.
What makes an in-law suite different from a rental unit? Generally, it is simply who is occupying it. That difference matters to your home insurer.
Most home insurance policies make provisions for boarders, roomers and tenants (i.e., non-family members) who live in secondary suites. Your home insurance will exclude the renter’s personal property but will insure the unit itself and any lost rent if the home becomes unliveable after an insured loss (if you have coverage for additional living expenses). As long as you inform your insurer that you have the suite, they may even cover it if it’s used for short-term rental.
As an owner of a secondary suite, you should ensure that your renter has tenant’s or renter’s insurance to cover their possessions and for liability. If the unit is rented to non-family members, the lease agreement should require the tenant to have legal liability coverage for a specified amount for the duration of their occupancy. However, your home insurance policy will cover the personal property and liability of your direct family members, for example your mother-in-law, living in the unit, or any person under 21 in your care (e.g. a foster child).
It is your responsibility to keep your family, or renters, safe.
If your secondary suite is a separate unit with its own entry, make sure the unit conforms to local bylaws, which typically require two points of entry and exit, as well as a smoke and carbon monoxide detectors, regardless of who is occupying the space. Check with your municipal and provincial governments for the full requirements.
Keep in mind that having a secondary suite could increase your property value, which may increase your insurance rates accordingly. As with any major renovation or change to your property, inform your insurance representative before the work begins to be fully aware of how your insurance policy may be affected.
