Central Insurance
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.
The insurer can easily check the property for any other structures. This is the most illogical reason for insurance I have ever seen and seems to be another way insurers collect additional premiums. If you don’t have detached “other structures” you should not need insurance for it and should not be required to pay the additional premium. You also do not insure your land from fires, etc. If insurance commissions allow for the additional premium to insure something you do not have, then they are also to blame.
Hi Richard, I appreciate you taking the time to read the blog. I can understand your frustration, but most people do have other structures whether they realize it or not. Driveways, fencing, basically any man made structure on your property that is not your main home may be covered under this coverage part. Also, the coverage typically is provided at no charge, so there is no change in premium even if you did drop the coverage down to $0. There are a couple of carriers that I am aware of that do charge for this coverage, and will provide you with no other structures coverage if you request it. With that said, I am not sure of the premium savings or their availability in multiple states. Again, thanks for reading.
I do not believe it is quite right to say that the other structure coverage is “cost free” or provided at “no charge”. The other structure coverage is built into the homeowner policy and I do not think many insurance underwriters would be able to tell you how it is determined.
Hello Eddie, thanks for taking time to read the blog. Actuaries are the ones who determine coverage pricing, and I am certainly not an actuary. With that said, Other structures is a percentage of your dwelling value, which can vary based on certain coverages purchased or carrier options. Typically is between 50% and 70% of the dwelling value is included in the policy. It does not reflect what structures may be on your particular property. With many carriers, decreasing that coverage does not decrease premium. So, is the price built into the policy premium? Perhaps, but it would stand to reason that if you are paying for other structures coverage then the premium would decrease if the coverage limit decreases.
Hey John, with all due respect, I believe this is the type of subject that adds to the skepticism toward insurance companies that is felt by much of the general public. It’s truly hard to understand how you can say the other structure coverage is provided for “free” – of course it is built into the cost of the policy. My company requires other structure coverage at 10% of my dwelling cost, so I have $30k of insurance coverage that I will never use over my deductible because I truly have no “other structures”. Yet I am quite positive this coverage affects my (all of our) premium and I have no choice but to pay for this truly useless (in my case) coverage. My questions would be: How can insurance companies afford to provide all of this coverage to homeowners for free? Wouldn’t these companies be out of business before long if they weren’t somehow charging us for this? So please don’t tell us it’s for free, it’s a forced additional coverage charge (if you don’t need it) that drives up our premiums…c’mon man 🙂
Exactly! Those that have no other structures on their property are in essence being charged for it to help cover the expense of the folks that do have other structures.
I called my insurance company one day and told them that I wanted to delete several lines of coverage on my homeowners policy and the canned response I got was “those items are all part of our package and cannot be eliminated”.
I wanted to eliminate the cost of hotel in the event our home was destroyed and need to be rebuilt. I also wanted to eliminate the coverage to haul away debris from the site in the event our house was destroyed by fire or wind. I personally own a company and the equipment to haul it away myself, plus I own other property that we can live in in the event we need to build a damaged home.
Again, I received that same canned response. “It’s all a package cost”.
In reality, it is a convenient way for insurance companies to avoid lowering the cost of their premiums for services the insured does not need or want. Allowing the insurance companies the luxury of not needing to expend the energy to create custom coverage for their clients.
This just tells me that the customer is not their REAL CONCERN after all.
What really needs to happen with the rip off insurance industry is two things:
#1. EVERYONE should shop their insurance policies annually. This would cause insurance companies to get more competitive real quick.
#2. When the insured receives the responses I received, the company should be notified that you are taking your business somewhere else rather than just knuckling under to them and accepting their answers which are designed to serve them more than the customer.
As previously mentioned, some carriers offer premium credits for coverage that is not needed. One example is Other Structures! This means if you do not have Other Structures, you may be eligible for a premium credit. We encourage you to work with an Independent Insurance Agent who understands your coverage needs and provides you with the proper protection.
You do not have any type of wall or fence around your property or in the back yard? That would be covered under other structures.
Hi Chris, thank you for reading the post. As stated in the post, if that coverage were to be decreased to $0 there would be no change in premium. Therefore, there is no additional charge for the coverage because Other Structures is part of a package. Many carriers do require that you have a minimum amount of the other structures coverage, but there are a couple who do not. You can purchase items a la cart, but most often this is a more expensive option. For example, you can go to Restaurant A and purchase a $30 steak which comes with two side dishes or you can go to Restaurant B and order the same $30 steak a la cart. If you purchase two sides seperately this will increase your overall cost for the same dinner.
Regarding the need for coverage, very few people actually have no need for other structures coverage. If there is a single man made item in your yard, then other structures coverage applies to you. Driveways, fencing, storage sheds, walkways, etc. are all other structures.
Hi John, thanks for your reply. Yes I understand that the other structures coverage is included in the premium and that there would be no difference in my premium if it could somehow be dropped. But what I think is the main point in both mine and others’ responses here it that we feel the coverage should be optional, and if someone should choose not to carry the other structures coverage, our premiums should be reduced accordingly. There is no doubt the cost of this coverage is built into my premium, and regardless of an opinion on how many people may/may not need the coverage, I (and many, many others) don’t think it’s fair to have to pay for coverage that I will never use. In using your restaurant example – I could go to my local pub and order a burger for $15 that comes with fries and a pickle…or choose to go to another restaurant that will sell me the burger a-la-carte for $10. In other words, I have a choice – there is no industry-wide standard among all restaurants that says I have to pay for the fries & pickle, while this is exactly what the insurance industry does with the other structures coverage. It forces all of us to pay for something whether we want/need it or not. I say lets call a spade a spade and say it’s simply a way of insurance companies guaranteeing themselves larger profits. All homeowner coverage is based on an estimate, which is based on an individual home’s specific size, features, etc. – why isn’t the others structures coverage based on the same determinations and then premiums adjusted accordingly? There is really no logical answer I can come up with to explain as to why this is not the case, other than it is a way to force people to pay more. In recent years, we have seen a great deal of government regulation having been applied to health insurers to help “level the playing field” between the consumers and the insurers – but perhaps it’s the insurance industry in general that needs a closer look. Appreciate your letting me comment on your blog.
I dropped my “other structures” part on my policy and saved $82 – I live in Myrtle Beach SC
Thank you for reading our blog, and we’re happy to know this article was of value to you! Some carriers offer a premium credit for coverages that are not needed. Before changing any coverage though, it’s best to consult with your agent to understand what exposures you have and the coverages available.
I’m surprised your carrier allowed you to drop it.
Who may I ask is your carrier?
Can anyone give me a ball park rough idea what the insurance cost savings percentage would be between an attached vs an unattached garage?
For the life of me I cannot get an insurance company to give me an idea.
Great question Harold! An attached garage would be considered a part of your homeowner value, which is considered “Coverage A.” The unattached garage is considered “Coverage B – Other Structures.” The cost depends on the value of your home and whether the garage is attached or detached. A standard homeowner policy typically includes a Blanket Limit of 10% of the Coverage A value. This automatic coverage may vary based on policy forms/language. For this example: if the Coverage A value is $150,000; the Coverage B would automatically be $15,000. In this example, there would not be an additional charge unless the value of the detached garage is more than $15,000. If you have an attached garage (included in Coverage A value) and no other structures (Coverage B); some companies offer a premium credit. Please contact your Independent Insurance Agent to discuss your specific insurance needs, coverage options available to you and provide you with a quote.
I paid extra coverage for my barn that is 60+ years old for last 12 years. Hurricane Matthew took my barn down to the ground. Now the insurance company said ‘we can’t pay for that, it’s too old’…. ? Wth? They had no problem taking my money for extra coverage for last 12 years but now it’s ‘different’? Sick to stomach that this is how your treated when you need them most.. what should I do?
We are very sorry you suffered a loss. We recommend you discuss this issue with your Independent Insurance Agent for guidance in this situation. Your Independent Agent will be able to discuss your coverage, the specifics of the loss, and provide you with direction on how to proceed.
Question: I bought an old travel trailer and tore out one 17′ wall and part of the roof and rebuilt it as a storage shed. I added on a 15′ x 8′ wood addition and a concrete front porch. It was badly damaged by hurr Harvey 2017. Adjuster just decided that since it WAS at one time a travel trailer it is not covered since it is a trailer. Why isn’t it now covered as an “other structure”. I never used it as a travel trailer and only for storage.
Thanks for your inquiry. Please contact your independent insurance agent for assistance with your question.