Whats the issue with a converted garage?

[Neilgh]

In pa...shopping around a policy on a house we are buying. It had a two car garage that had been converted into living space. At least one company lists that as a prohibited risk. What's the reason for that?

 

[Silverplum]

In pa...shopping around a policy on a house we are buying. It had a two car garage that had been converted into living space. At least one company lists that as a prohibited risk. What's the reason for that?

That sounds like a question for the insurance agent.

 

[adjusterjack]

In pa...shopping around a policy on a house we are buying. It had a two car garage that had been converted into living space. At least one company lists that as a prohibited risk. What's the reason for that?

Could be a lot of reasons:

1 - The company has had more than its share of claims on converted garages.

2 - It was a knee-jerk reaction of some corporate executive who heard somewhere that converted garages were bad risks.

You'll find that many insurance companies don't have that problem with converted garages.

But your question brings up two important points that I can think of:

1 - Before you make an offer on the house you should check with the building department and make sure that the conversion was done to code, had a permit, and successful inspection. If it didn't you could have a problem with your mortgage company and insurance companies.

2 - Make sure that the converted room was also tied in with the home's central air conditioning and heat. If it isn't, the appraisal might not include it in the home's living space and that could reduce the appraised value which would reduce the amount that you can borrow to buy the house.

Of course, if you are buying the house subject to appraisal that could be to your advantage now, but would be to your disadvantage when you sell the house some day.