Home Insurance Articles
How Basement Suites Can Affect Home Insurance Rates
2010-09-30
The recession has had a huge impact on housing. People have lost their jobs and their homes. Many people are underemployed, and two-income households are struggling on just one source of income. That's why finding an inexpensive apartment is essential. Enter the homeowners with basement suites to offer as rentals. This can be the perfect matchup of those looking for inexpensive rentals and homeowners desiring additional revenue to help with their own mortgage payment. This scenario is ideal if the homeowner is renting a conforming basement apartment and has added the use change to his insurance. Any changes made to a dwelling's structure or use can result in changes to the home insurance rate.
Basement suites usually consist of a bath, kitchen/kitchenette and bedroom/personal living space. They can be one room-a studio apartment-or each room may be separate and include a living room. Other names they are known by are in-law apartments, mother-in-law apartments and accessory apartments. All of these small apartments are included in the main dwelling, though they may have their own private entrance. The main concern before getting ready to rent one of these spaces is that it is a conforming space. That means that it passes the local building codes. The most prevalent problem for basement suites is the bedroom windows are too small for egress in case of emergency. The bedroom must have more than one exit in case of fire. The next consideration is moisture control. A correctly sized dehumidifier usually accomplishes this.
The insurance agent will determine what type of coverage is needed for a rental unit that is part of the main dwelling. It may change the designation from single family to multi-family. If the basement suite is to be used by a family member or guests, there may be no increase in home insurance rates. A second kitchen and extra residents increase the risk the insurance company takes, so it is important to notify the company prior to the change taking place. It is wise to have extra coverage to protect against damage or injury to your tenants, their property or their guests.
It is counterproductive to neglect to inform the insurance company of the change and get the required coverage. If a tenant causes damage that extends to the main dwelling, the company may refuse the claim. For example, if a fire originates in the tenant's apartment and it engulfs the home, the insurance company can deny the claim. Failure to upgrade a policy for an important change can void the contract between insurer and insured. A phone call and a relatively inexpensive additional premium will protect the homeowner from substantial loss.