Relatives count in your numbers even if they are living in your house because you do not have custody of them. I have even heard issues when it is step children on alternate weeks so for sure I would be putting in a call to insurance but more importantly to the ministry asking for clarification. Make sure they know she will be living under your roof but really that doesn't change the relationship.

On the insurance side of things your son should have the equivalent of renters insurance on his belongings and liability for his own family as should anything happen the items won't be covered by your home insurance potentially. Again based on a horror story from friends renting out a basement apartment to students.