Question about finished basements and renting.

[Brian H.]

Hey everyone!

I was looking at a house today that is a 3 bed/1.5 bath. It has an unfinished basement that one of the current tenants is still sleeping in. He has actually made it quite cozy.  But, aside from that, I am trying to understand something.  If I purchased this property and wanted to finish the basement and then turn it into a seperate studio apartment, aside from the rest of the house, what are the legalities there in terms of insurance? Would this turn the home into a duplex or would it just be a house with a basement apartment? Does insurance cover that all the same? Thank you guys!!!