I find it interesting how Other Structures coverage on the Homeowner’s policy is often overlooked by those who need it, but becomes a point of contention for those who feel they do not. I field a lot of calls from policyholders who wish to remove the coverage because they don’t have a shed or detached garage on their property, but very rarely do I get a call from a homeowner requesting more coverage due to the cost of structures on their property.
It is safe to say that almost everyone needs Other Structures coverage. Other Structures covers any (subject to policy exclusions) building or structure that is not attached to your home. Not only are detached garages and sheds part of this category, but barns (not part of a business), fencing, and driveways are all included under this coverage part as well. Also, the Homeowners policy provides this coverage, which is 10 percent of your dwelling coverage, at no charge. Some carriers even increase this limit cost-free, so be sure to check with your agent or insurance carrier to see what they are offering you.
This automatic percentage is both a good and bad thing. The good part is that the policy recognizes that almost everyone needs at least some coverage for other structures, and therefore provides it to you automatically at no cost. The bad part is, because it is automatically provided, many people do not think about whether or not the coverage being provided is enough.
For example, if your home is insured for $250,000 and your policy is providing 10 percent of this coverage for other structures that gives you $25,000 automatically. If you have a covered barn or a large shed as well as a 2-car detached garage with a living area above it, then this may not be enough coverage for you. Barns are typically expensive to build, and a garage with a living area above it (such as an entertainment area or office, etc.) can get pricey as well, depending upon the size and materials used. It is always a good idea to take stock of what you have for detached structures and assess whether or not the coverage being provided on your policy is enough to cover everything. If your home were to be engulfed in flames, there is a good chance that these outbuildings may catch fire as well (depending upon their proximity to the home itself). You want to be sure that in a worst case scenario there is enough coverage to go around.
Additional coverage for Other Structures can be added for an additional charge. It is good to note that while detached buildings can be covered at replacement cost (which will pay for the repair or replacement of the building without a deduction for depreciation), other structures which are not buildings are covered at Actual Cash Value (which depreciates the amount the carrier will pay out based upon the age and condition of the structure prior to the loss). These items would include fencing, driveways, and other man-made structures that are not buildings.
So the next time you are puttering around your yard, take stock of what you have on the land and contact your insurance agent to discuss these structures and whether or not you should increase your Other Structures coverage to be properly protected.
For more current information read this updated article Other Structures Need Other Coverage .
The coverages described above are in the most general terms and are subject to the actual policy conditions and exclusions. For actual coverage wording, conditions, and exclusions, refer to the policy or contact your insurance agent.