Coverage Types
ADU (accessory dwelling unit)
Definition
An Accessory Dwelling Unit (ADU) is a secondary, self-contained residential unit located on the same parcel as a primary single-family dwelling. ADUs — also known as in-law units, granny flats, or backyard cottages — present unique insurance considerations. Depending on whether the ADU is attached or detached, owner-occupied or tenant-occupied, it may be covered under the primary homeowners policy's dwelling (Coverage A) or other structures (Coverage B) provisions, or it may require a separate dwelling fire or landlord policy.
In Zach’s Words
“ADUs are everywhere in the Bay Area — granny flats, backyard cottages, converted garages. The insurance question is: how is it covered? If the ADU is attached to your main house, it generally falls under your dwelling coverage (Coverage A). If it's detached, it falls under Other Structures (Coverage B), which is usually only 10% of your dwelling limit — and that might not be enough if your ADU is a full living space. If you're renting it out, things get more complicated. Some carriers will cover a tenant-occupied ADU under your homeowners policy with an endorsement, but others will require a separate landlord or dwelling fire policy. Bottom line: if you have an ADU, don't assume it's automatically covered. Let's make sure it's properly insured.”
— Zach Nadler, CIO