If you rent out your basement, or a room, will it affect your home insurance?
A recent survey suggests that about 14 per cent of Canadian homeowners rent out a portion of their home. The survey, undertaken by Square One Insurance (one of the home insurance providers who offer quotes online through us here at Kanetix.ca), found as well that there were significant regional variations.
In British Columbia, the survey results estimate that 26 per cent of homeowners rent out a portion of their home, in Ontario seven per cent, in Alberta five per cent, in Manitoba six per cent, and in Saskatchewan it's about three per cent.
Daniel Mirkovic, Square One's President & CEO, said in a statement that it's understandable given today's economy and the price of real estate why so many people are choosing to take on renters. It's also noted that rental income from tenants can be a great help in paying off your mortgage.
- Tip: When it comes to mortgage rates, every percent counts. Shop around for the best mortgage rate today.
How will taking on tenants affect your home insurance?
Square One Insurance details a number of items to keep in mind if you're renting out a portion of your home including:
- Before renting out your home, call your home insurance provider. A rental suite may or may not be permitted under your existing home insurance policy and you may need to make changes to ensure your coverage remains in force.
- If you build a rental suite in your home, you'll likely increase the value of your property. Most insurance policies require that you keep your insurer in the loop about improvements, and if you don't, you may find yourself underinsured in the event of a loss.
- Your home insurance policy likely stipulates that you need to inform your home insurer if you make any significant changes to your home, or to how it's used. This would include your home changing from a single-family dwelling to a multi-family dwelling.
- More people living in the home leads to an increased liability risk. If your tenant, or one of their guests, trips on a ladder in your backyard, or slips on an icy step, you can be sued. You may want to increase your liability coverage due to the increased risk.
- Your homeowner's policy will not cover your tenant's property, nor will it cover your own property in the unit, such as window coverings, appliances, or furniture. You may need to add "landlord's property" insurance. Also, make sure your renters carry their own tenant insurance. This will cover their personal property, and may cover your property, if they unintentionally damage your home.
- Some cities, like Vancouver, allow the conversion of a garage to a laneway home. The insurance on your laneway home will need to be upgraded to cover a secondary dwelling to protect it to its full replacement value, or you will need to purchase a separate policy all together.
Make sure your covered
Taking on tenants can be risky. Don't go at it alone; make sure your home insurance will provide you with the protection you need.