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How does your secondary suite effect your insurance?

High priced Real Estate has created a need for homeowners to subsidize their mortgage payments with an income from renting a part of their home to willing tenants. Many municipalities have very strict bylaws that controls this activity. Today I don't want to talk about legality of secondary suites but let's talk about your home insurance policy.

Whether the suite is legal or illegal, having insurance coverage is vital. There is a misconception among home owners that their existing policy will cover a suite. It doesn’t.

When there are two households living in one house, and a homeowner who doesn’t tell their insurer about a suite, they 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.

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, The insurance companies have no duty to report to the local government what type of insurance you purchased.

However, I always advise my clients to comply with local bylaws and report and register the suite with the local municipality.

Kind Regards,
Tibor Bogdan

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