Lane, coach or carriage houses

February 23rd, 2017 in Insurance

With the continuing high prices of real estate in the Lower Mainland, many people are looking into ways of making owning a house more affordable by including an additional detached structure on their premise for rental. These structures are commonly referred to as coach, carriage or laneway houses.  They are usually part of the existing garage or included as part of a newly constructed garage. Not withstanding local building bylaws, there are also considerations for insuring them.

These structures are not included in the usual homeowner policy as a detached building. Normally 10% of your dwelling value is automatically included in a homeowner policy. This usually applies to any other building on the premise such as a gazebo, storage or hobby shop. However, a laneway house needs to be underwritten separately, much the same way a home is underwritten. The materials used, plumbing type and electrical wiring plus finishing materials are all contributing factors in determining the insurable value.

You also need to declare the usage of this dwelling to your insurance broker. Having a family member live in the house is one thing but renting it out to an unrelated party is another consideration. Your main homeowner policy would need to be amended to show as a two family dwelling which will likely increase your overall premium.

If you do not declare the rental to your broker, then your homeowner policy would likely not respond to any loss on your property as this would represent a material change in your circumstance. This exclusion is part of the policy’s statutory conditions that are common to all home insurance policies.