Updated January 1, 1 . AmFam Team
As your parents advance in age, there may come a time when you decide to bring them into your home. And whether or not you have an in-law suite for them, you’ll still want to know how it can impact your homeowners insurance policy. When parents make their primary residence your home, the policies you have in place may need to be re-evaluated. If you find yourself saying, “My mother-in-law is moving in with us,” and aren’t sure where to turn, we’re here to help you understand how insurance for your home should be adjusted so that your home is well-protected.
One way to define an in-law suite is to look at it like a fully-qualified apartment. Amenities like a bathroom, a separate entrance, a kitchen and bedroom all help classify in-law quarters. For all practical purposes, the in-law quarters can be considered an apartment. And that means the people living in the in-law’s suite are essentially tenants when it comes to getting the right insurance.
That means your in-law’s personal property can be covered by a renter’s insurance policy, which can help to cover their belongings with personalized — or scheduled coverage — if need be. And as a homeowner, their extra insurance can help to extend your coverage beyond a typical homeowners policy. If someone living in your in-law suite damages the dwelling, and the loss is covered by an active renter’s policy, they’ll only have to cover the cost of the deductible. And equally important, your finances can be sheltered from covering the expense of the repairs, given that the damages are within the limits of the renters policy.
When the in-law living quarters are a detached structure, the insurance profile shifts. Additional detached property coverage will likely be required for your homeowners policy when square footage limits are exceeded. And you have several options for other structures coverage:
All-structure blanket coverage. You can choose a blanket coverage amount that covers all buildings and structures on your property (except structures used for farming or agriculture).
Individual structure coverage. You can pick and choose which buildings or structures to cover and appropriate coverage levels for each. Your American Family Insurance agent can help you evaluate the value of your detached structure so you have accurate coverage limits.
So, what is the value of adding an in-law suite? There are many benefits and drawbacks. If your home isn’t outfitted with an in-law quarters, building one may benefit you. On the other hand, you may have to pay out more as a result. Take a look at the pros and cons of adding an in-law suite to your property:
Your property’s resale value may increase. Adding the in-law suite can bump up the value of your home when increasing the square footage of your home or creating an additional structure is in play.
Your home may sell more quickly on the open market. It’s a unique upgrade that can set your home apart in a crowded real estate market.
Upgrading to an in-law suite can be costly. The money needed to outfit your space with an additional bathroom, kitchenette and related plumbing can add up.
You can finance the upgrade with a home equity loan. Depending on the amount of time you’ve been in your home, you may qualify for a home equity loan to finance the additional work to build an in-law suite.
Your home’s assessed value may increase. Along with a higher resale value, your property may see an increase in taxes as a result.
Your homeowners insurance premium may change. When a home’s appraisal rate increases with the addition of an in-law suite, the cost to insure it can increase.
As you consider your options for taking on an in-law suite, get in touch with your American Family Insurance agent (Opens in a new tab). They can help you understand how homeowners insurance can help you protect your big investments.