Unpermitted room -- insurance

[Bienes Raices]

Will homeowner's insurance cover a house that has an extra room that was added on without permits? (garage to room conversion)

[Bill Gulley]

There are several issues that come into play on this.

Your policy may say that any coverage is excluded for and dwelling or addition that does not meet code requirements. Code requirements that were in effect at the time of construction will apply, not future changes, in most instances. An example, in my area, some counties had no building code, then adopted the code and homes built prior to adpotion of codes are exempted or grandfathered. An exception in this area would be for rentals that are required to have fire detectors.

When a property has illegal additions, there is generally a time frame, like 7 years, where officials have the opportunity to enforce the code, past that, the additions are assumed to have been accepted and authorities will not persue enforcement.

In many areas a garage conversion is simply ignored, especially for an attached garage. It's hard to say that a garage can not be heated or cooled, that it can not have furnitue in it or that the floor can not have tile or carpet. Where it might get touchy is when you have a bathroom or kitchen addition, which could violate several codes for such rooms, electrical and plumbing. The only real violation might be that a wall was constructed in the door area, and I have seen additions where the door was left in place with insulation inside and wall covering and siding outside!

Unless the policy has specific language addressing additions, such an addition will generally be covered, for that area under roof. Tim W. might address the quality of construction issue as to claims that may effect payment of any claim, but again, it's hard to argue that you can't have a couch in your garage area or a picture on the wall.

Another aspect is that when you obtain a policy, the agent or someone will usually take a picture of the property for underwriting the policy. If it is obvious that there is no garage door, that's what the company accepted to insure.

As far as insurance goes, I would not point it out at the time of obtaining a policy, since that should be obvious to the company in their due diligence and underwriting, do you point out that there is a livingroom?

Bottom line, I have never heard of an insurance company that denied coverage for such an addition, but that's in my area. They still have to cover it as a garage and I have seen garages that were pretty nice. Everything inside the garage is still personal property under roof and within the footprint of the dwelling, so it would be covered as well.

I really don't see any problem for the issues pointed out here. It will depend on how local ordinances and codes are applied and the specific language addressing additions in the policy. This is not a fradulent issue, as it is inspected by the agent prior to issuing the policy, it's obvious.

The matter pointed out above applies to providing false information or the application, maybe saying it has a breaker box when it has a fuse box, something that change how the property was underwritten and how premiums would be set. If such things surface in a claim, generally the company will simply retain the amount of premium that should have been paid from the proceeds. But let's say you used the bedroom to manufacture meth and had a fire. Losses arising from illegal acts will not be covered, if the insured was involved, if it was a tenant and without your knowledge, they will probably pay, at least they do here.

One other thought, changing a property after the property was underwritten might be a problem, but again, I would not be concerned about a garage conversion, but if the modification would materially change the premium or the policy or increase the risks transferred to the company....you should notify your agent of any additions made for a determination. IMMHO!