Do you have a “secondary suite” in your home? It’s important to be aware of a number of insurance issues surrounding this particular home modification.
Bow Valley Insurance is an independent brokerage of the insurance lines from as many several insurance companies, and has been covering Canadians for 36 years.
What is a Secondary Suite?
A secondary suite is defined as “a self-contained dwelling unit that is located within a primary dwelling unit, where both dwelling units are registered under the same land title.” Whether found in the basement, on another floor, or in a detached structure somewhere on the grounds, any such living space is considered a secondary suite. Only certain areas of the city are zoned for a home with a secondary suite, and if you aren’t in that zone, you must apply for a variance, which includes the prospect of public input from your neighbours.
Over the decades, secondary suites in Calgary have increasingly come under regulatory scrutiny and are now subject to comprehensive building code requirements. Modern secondary suites require their own off-street vehicle parking space, a separate exterior entrance, independent heating system and duct work in most versions, minimum ceiling heights, enclosed walls and ceilings, and on and on.
Subsequently, there are two types of secondary suites in Calgary, the legal and the illegal. The question arises as to how does your homeowners insurance policy treat a secondary suite at all?
Tell Your Insurer About Your Secondary Suite
Whether legal or not, your insurer will not cover damages arising from a secondary suite it does not know about. And there are many potential risks of having tenants. What is your liability when your renter accidentally starts a fire? How will the insurer calculate damages if the sewer backs up? Does your tenant even have renter’s insurance?
And you certainly can’t make a claim for lost rental income when your insurer doesn’t even know you are leasing out a portion of your property.
Legal or Not, Your Insurer Needs to Know
Your insurer will want to know exactly what risks they are being asked to cover in exchange for your premiums. If there is an incident wherein injuries or loss to your tenant can be traced to a code deficiency with the secondary suite, one you did not correct, there could be complications if an insurance claim arises. You are advised to bring your property to complete compliance with code. You want your tenant to have a clear fire escape route and as a landlord, you want them to be comfortable bringing to your attention any developing problems with the secondary suite.
Make Certain You Even Want To Be a Landlord
Being a landlord is not easy. Before renting out a secondary suite, you need to make sure you are comfortable with performing or contracting out repairs, having familiarity with provincial and local landlord/tenant law, and that you know the tax effects of letting out part of your house as an income property.
Regularly reviewing your current plan can help you get the most you can out of your insurance dollars. Contact Bow Valley Insurance for a free home insurance quote.