Translation:My family is inside.
And it is correct to say either IS or ARE in this case, but Duolingo don't get it.
Most people see a family as a group of individuals, so they tend to say 'are' as a plural.
Because family in one thing and therefore singular, it is also correct to 'is'.
In English we select either according to the context.
Here are a couple of examples that are more obvious:
"His family [members] are all doctors" works well enough, so you can use 'are'.
"His family [members] is one of the oldest in the county" doesn't really work so you can't use are.
If you treated Britain as a unit (say a sports team), that works. "Manchester United are okay" is definitely a standard thing to say to British English. If you had a national team for Great Britain in some sport (I think some Olympic sports do?), "Are Britain okay?" would be just fine. I'm not sure if it works for the whole nation though