granny flat insurance implications?

[whitt]

What would be the implications if say a granny flat or extra bedroom burnt down that did not have council approval?
Would the insurance companys pay out?
What I am getting at is would we not be better to do the job properly ( get permits etc..) rather than risk the chance of not being covered by insurance and losing our IP.

 

[Sunstone]

Dear Whitt,

Definitely get council approval. Insurance companies will find any possible reason to avoid paying and this is just presenting one on a plate for them.

You would also be voiding your public liability insurance thereby potentially opening the way for a law suit from the tenant should anything negative happen to the tenant which could be attributed to your negligence.

Cheers,

Sunstone.

 

[geoffw]

Whitt,

What my be worse (well, pretty bad anyway, and perhaps more likely) is if a neighbour dobs you in- and then you have to get it all pulled down, and pay the tenant compensation.

And if it's unapproved, it may well be ignored in the vital valuer reports.

Better to buy a property with the unapproved structure in place.

 

[Crystal]

Hi Whitt,
Excellent question!
My original insurance company would not cover a dual occupancy. I researched my options and have used an insurance broker who obtained insurance with CGU for my non council approved granny flats with full disclosure.
Cheers,
Crystal

 

[whitt]

flat insurance

well I am getting council approval for our dwelling anyhow they have had it 2 weeks now so it should be back soon and ready for construction.

 

[XBenX]

Originally posted by Crystal
Hi Whitt,
Excellent question!
My original insurance company would not cover a dual occupancy. I researched my options and have used an insurance broker who obtained insurance with CGU for my non council approved granny flats with full disclosure.
Cheers,
Crystal

Nice tip Crystal, Ill keep that in mind ?

Just to clarify you informed your insurer that you had a non council approved granny flat that was tenanted and you wanted cover for both the granny flat and the main residence ?

 

[Crystal]

Hi XBenX,
Absolutely correct.
Cheers,
Crystal

 

[Crystal]

An update:
As it happens, my granny flat DID burn down and my insurance company paid the claim of $66,796.
However, they will no longer insure ANY of my houses which have non council approved granny flats.
Regards,
Crystal
PS Does anyone know of a good insurance broker?

 

[capcremo]

Hi Crystal,
For some time I have struggled with the dilemma of insurance implications on a non council approved structure. I purchased a property in 2002 with the intention of converting the garage into a granny flat and renting both it and the main house out for dual income. It was actually suggested by the real estate agent since there were "hundreds" of similar type structures in the area and it sounded pretty attractive income wise.
I started converting and extending the garage and was soon dobbed in to the council by a neighbor. I then went through the process of getting the structure approved as a studio. The council ruled that it could not be used as a habitable building.
Nevertheless I pushed on and finished the "studio" albeit decked out as a granny flat. However at the time of looking to rent out the house and the granny flat, I asked the question several times of property managers about insurance implications for the granny flat. They were never really able to satisfy my concerns regarding say a fictitious claim from a tenant for personal injury from a slip or a fall. In the end I decided the risk was just not worth it and never rented the granny flat out.
Any way, best of luck.