Does having a basement apartment affect my homeowner's insurance?

Yes, having a basement apartment will definitely affect your homeowner's insurance, and you must notify your insurer before creating the rental unit to avoid coverage issues.

Converting your basement into a rental apartment changes your property from a single-family dwelling to a multi-unit residential property, which carries different risks and requires different coverage. Most standard homeowner's policies specifically exclude coverage for rental activities, so failing to disclose a basement apartment could result in denied claims - a costly mistake that many Ottawa homeowners don't realize until it's too late.

Insurance Premium Impact and Coverage Changes

Expect your insurance premiums to increase by 15-40% when adding a basement apartment, depending on your insurer and the specific setup. The increase reflects additional liability exposure from having tenants, higher property values after renovation, and increased risk of claims from more people living in the home. However, this cost is typically offset by rental income - most Ottawa basement apartments rent for $1,200-$2,000 per month, making the insurance increase manageable.

Your insurer will likely require you to upgrade to a landlord or multi-unit dwelling policy. This provides additional liability coverage for tenant-related incidents, coverage for loss of rental income if the unit becomes uninhabitable, and protection for landlord-specific risks. Some insurers offer hybrid policies that combine homeowner's and landlord coverage for owner-occupied properties with rental units.

Ottawa-Specific Considerations and Requirements

In Ontario, you're legally required to maintain adequate insurance coverage for rental properties, and many insurers now require proof that your basement apartment meets Ontario Building Code requirements before providing coverage. This includes proper fire separation between units, adequate egress windows, and separate electrical panels - all standard requirements for legal secondary suites in Ottawa. Insurance companies may request inspection reports or building permits as part of their underwriting process.

The City of Ottawa's secondary suite regulations actually work in your favor with insurance companies, as properly permitted and inspected units are viewed as lower risk. Insurers prefer legal suites that meet current safety standards over unpermitted basement apartments, which they may refuse to cover entirely.

Professional Guidance and Next Steps

Contact your insurance broker before starting any basement apartment conversion to understand your specific policy requirements and get quotes for updated coverage. Some insurers specialize in rental properties and offer better rates than others for basement apartments. Don't wait until the renovation is complete - insurance changes can take time to process, and you don't want gaps in coverage.

For a properly planned and permitted basement apartment that meets all safety requirements, contact Ottawa Basements for a free consultation. We ensure all our secondary suite conversions meet both building code and insurance requirements, protecting your investment and keeping you properly covered.