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Laneway Houses Lead To Insurance Questions

With urban real estate costs rapidly increasing, many potential homeowners are looking for other options to offset housing costs. One option that many are considering is revitalizing the idea of the laneway house. Traditionally used for parking garages, these detached buildings were often used either as servant’s quarters or to house adult family members.

These days, many homeowners are thinking of converting their additional structures into residential buildings that they can rent out to offset the costs of their new homes. While not all cities allow for this, Vancouver issues permits for such projects and Calgary is launching a pilot project to allow it on one of their streets. But what does this mean from an insurance perspective?

As of now, most insurance companies cover laneway homes in the same way that they cover regular houses, and don’t offer a separate policy for the separate dwellings. This could prove problematic, as the laneway house will live in a legal grey area between “detached structure” and “dwelling”. Also, if the building is being rented out, a homeowner’s policy may not cover it. The safest course is to disclose the use of the laneway building to your broker or agent, and have him or her ensure that your insurance needs are properly addressed.

Certainly the appeal of a laneway house is not lost on many residents, and while cities start to consider the idea, it wouldn’t be a surprise to see this be an issue that insurance companies take a look at.