Granny flat insurance

Question from Michelle updated on 19th September 2014:

I'm looking at buying a home with a granny flat underneath. The ceiling isn't fire proof. It will be rented until I can live there with my family. Is there any issue here with insurance? Both upstairs and downstairs are fully self contained except there is no oven in bottom flat. Thank you.

Our expert Leanne MacKenzie responded:

Obtaining insurance for the house shouldn’t be a problem, although having a non-fireproof ceiling may affect you at claim time.  If there was no legal requirement to fireproof the ceiling between floors when the house was built then as long as you haven’t received notice to upgrade the ceiling to meet current building code, claims involving damage to the ceiling should be paid. If you have been notified the ceiling no longer meets current building code and have not made changes to satisfy those requirements, you may have a problem at claim time.  Insurers will generally not pay for costs to bring a home up to current code if you have already been notified to make those changes. This is because you would have had to pay these costs even if the claim/loss had not occurred. Remember it is really important to disclose anything your insurer would reasonably expect to know about your home. For example, advising them your home will be rented as two fully self-contained areas so the correct levies (for the Earthquake Commission and Fire Service) are charged.

Leanne MacKenzie has over 25 years experience in the New Zealand personal property insurance industry. As personal lines manager for Crombie Lockwood she has been instrumental in introducing the important changes that have been made in the sector over the last 12 months. “Every property owner owes it to themselves, as a landlord and a homeowner, to understand the new regime.” Leanne is based in the company’s national office in Auckland.

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