Insurance blowing up my refi?

[Ryan K.]

My property has a 3-bedroom, 1900 sf plus unfinished basement house, and a detached 3-car garage, with a 1-bedroom, 650 sf apartment above.  I rent out the main house and live in the apartment, I have full use of the garage.  Property breaks-even by renting out front part, it's been a great set-up.

I'm trying to refinance right now from 4.529% to 3.625%, significant difference. However, the deal is in jeopardy because of how my property is insured. It's insured through a local AmFam agent, who also has my car and motorcycle policies. It is insured w 2 policies: Businessowner policy for the front (main) house that is rented, and a condo policy on my dwelling. The bank underwriters won't close because it's not insured as a primary home (which it is). Insurance agent insists this is the only way he can do it. In my mind, it's not a business or a condo, it's an SFR with an ADU, but since I live in the ADU, it seems to screw up insurance and financing. Anybody have experience like this? Any insurance agents out there with competitive quotes for 81631?

Thanks