Square One warns: Failure to disclose rental suites may void home insurance
VANCOUVER, British Columbia, Dec. 19, 2018 (GLOBE NEWSWIRE) — A major player in Canadian home insurance encourages customers to inform their insurance providers about rental suites in their homes even if the suites don’t comply with the law.
Square One Insurance Services recently conducted a survey of homeowners, yielding some eye-opening results. The Vancouver-based company found that 18% of rental suites don’t comply with regulations. The issue was most notable in Ontario, where 22% of suites don’t meet the requirements, followed by BC at 15%. The true figures are likely higher as some homeowners won’t admit to having illegal suites.
“The high percentage of illegal suites is due to the outdated regulations still in force in some provinces,” says Stefan Tirschler, Square One’s Product and Underwriting Manager. “For example, Vancouver and Toronto only allow for one rental suite per single-family house. There’s really no reason for this, but technically, homes with more than one rental suite are illegal.”
Homes built before 1970 were not typically designed with the flexibility that many have become accustomed to today. In these homes, basements were designed primarily for storage, without the foresight that a tenant may one day occupy the space residentially. This presents a variety of hazards to landlords, including (among others) a myriad of electrical issues; from unsuitable wiring to overloading the circuitry with extra appliances and hotplates.
“These fire hazards are terrifying when you consider that some basement suites also don’t meet the regulations for emergency escape routes,” says Tirschler. There are regulations in place in most Canadian provinces that require basement suites to have their own dedicated entry from, and exit to, the outdoors. “The nightmare situation for us is a fire at the property that traps the tenants in the basement. This is part of the reason why we impose rules upon our customers; our underwriting guidelines aren’t there for fun, they’re there to keep you safe.”
Square One encourages customers to be completely honest with their insurance provider, even if it means revealing that their basement suites breach regulations. “Just tell us,” states Tirschler. “We need to know about rental suites, even if they’re illegal or if you don’t report the income from them. The more honest you are during the application process, the more we can help to protect you. We’re not the regulations police; what you tell us is treated confidentially, but we do need to know these things in order to give you the right advice.”
Tirschler continues by saying, “Failure to disclose rental suites to insurance providers is unbelievably risky. In the insurance industry, not disclosing important information is known as misrepresentation of a material fact. If it’s determined you misrepresented a material fact, then your entire policy could be void, leaving you unprotected in the event of a loss.”
There’s a perception that the home insurance industry tries to deny claims. At one time, this perception may have been warranted. Nowadays most insurance providers try to find ways to cover claims. In fact, more than 90% of claims are accepted and paid without issue. When claims are denied, it’s often for misrepresentation of a material fact.
Tirschler shares a recent example where a Square One customer failed to disclose not only that their home had a rental suite, but also that the suite’s living room had been converted into two additional bedrooms. Unfortunately for the owner, a policy would not have been offered if this information was disclosed. As a result, the claim was denied.
To those of you reading this with the sinking feeling that we may be describing your situation, Tirschler recommends that you call your insurance provider as soon as possible. Your insurance provider can discuss your situation as well as your options. He also indicates that it’s worthwhile that you understand some basic terminology.
Most insurance providers define a ‘tenant’ as a person who occupies property rented from a landlord; a ‘roommate’ as a someone with whom a tenant shares their rented property; and a ‘boarder’ as a paying resident in your portion of the property. It’s important to disclose to your insurance provider if any tenants, roommates or boarders live with you or in your home.
If you’re a homeowner with a basement suite, then it’s recommended that you speak with your provider or call Square One at 1.855.331.6933.
Established in 2011 and based in Vancouver, British Columbia, Square One offers the only home insurance policy in Canada that can be personalized to your unique needs. That means you only pay for the protection you need. Square One is also one of the few providers to automatically include critical water backup protection in its policies. Square One currently serves British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Oregon and Arizona. For more information about Square One, or to get an online quote, visit www.squareoneinsurance.com.
For more information on this release, please contact:
Marketing Team Lead
Square One Insurance Services
Tel: 1.855.331.6933 ext. 127