Know the rules when it comes to insuring secondary suites
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Secondary suites continue to be an affordable housing option for Metro Vancouver area residents, benefitting 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 101,808 accessory suites in the Metro Vancouver region.
“With so many suites in our area, it’s important to remind home owners to let their insurer know about a suite and to buy insurance to cover the suite,” says REBGV member David Chambers, a licensed REALTOR® and a licensed insurance agent, and vice-president of Chambers Olson Insurance in Vancouver.
“Whether the suite is legal or illegal, having insurance coverage is vital,” says Chambers who notes there is a misconception among home owners that their existing policy will cover a suite. “It doesn’t,” says Chambers.
A home owner who doesn’t tell their insurer about a suite and that there are two households living in the home, opens themselves 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,” explains Chambers.
Some home owners may not properly insure their property because of fear that their insurer will report the suite to the local municipality. “This isn’t true,” says Chambers. “However, we always advise our clients to comply with local bylaws and report and register the suite with the local municipality.”
How much will insurance cost? “About 10% of the cost of your total home insurance. So if you’re paying $1,200, it will cost you an additional $120,” says Chambers.
Home owners who rent their secondary suite can also buy separate comprehensive rental insurance. Depending on the insurer and on the policy, this can cover vandalism and damage by tenants, typically up to a payout maximum limit of $5,000. 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.
REALTORS® should also advise clients buying property with suites to find out beforehand whether the property is insurable. “If your client can’t get insurance, it could void the contract,” notes Chambers.
© Real Estate Board of Greater Vancouver