Know the rules when insuring secondary suites
Secondary suites continue to be an affordable housing option for Metro Vancouver residents, benefiting home owners as mortgage helpers and tenants as a less expensive roof over their heads.
Secondary suites are so prevalent that Canada Mortgage and Housing Corporation estimates there are now about 156,445 accessory suites in the region.
If you’re a home owner who has one of these suites, or you're looking to buy a home with one, it’s important to let your insurer know and to buy insurance to cover it.
Legal or illegal
Having insurance coverage is vital. There’s a misconception among home owners that their existing policy will cover a suite. It doesn’t.
If you don’t tell your insurer about a suite, and that there are two households living in the home, it opens you up to significant risk.
An unreported and uninsured suite could potentially void the existing insurance contract on the primary residence if there is a flood or a fire.
Some home owners may not properly insure their property because of fear that their insurer will report the suite to the local municipality if the suite is illegal. Remember, it’s important to comply with local bylaws and report and register the suite with the local municipality.
How much will insurance cost? About 10 per cent of the cost of your total home insurance. So, if you’re paying $1,500, it will cost you an additional $150.
If you rent your secondary suite, you can also buy separate comprehensive rental insurance. Depending on the insurer and on the policy, this can cover vandalism and damage by tenants. This insurance doesn’t cover the tenant’s belongings. The tenant has to buy their own insurance for their possessions.
Home owners with laneway homes, coach homes above garages, and other authorized or unauthorized accommodation on their property should also let their insurer know and should buy appropriate coverage.
Source for secondary suite data: Metro Vancouver Housing Data Book, p. 16