Growing up, most of us probably thought of insurance as just a massive, nebulous block of protection for our stuff. OK, maybe we didn’t all think about insurance as kids. Either way, when you get older and buy a house, you find out that insurance is actually tuned to your specific needs. There’s nothing nebulous about it. And that’s why it’s important to make sure you understand what’s covered, what’s not, and what that coverage means in the event of a loss.
In fact, there’s a lot going on under the hood of a homeowners insurance policy. In our “Coverage of the Month” blogs, we explain the ins and outs of each coverage type in your homeowners policy. (Check out last month’s blog on Coverage A, “Dwelling.”)
On tap this month: what’s called Coverage B, “Other Structures.” It applies in situations in which you have structures other than your house on your property — maybe a detached garage, fence, or the like. Let’s break it down.
Which “Other Structures” Are Covered?
What sorts of things are covered under Coverage B? Policies generally classify these “other structures” as being separated by a clear space from the residence (known in insurance-speak as your “dwelling”), or connected to the residence only by a fence or utility line.
Smaller, detached buildings of all sorts are the more obvious examples. The coverage could also include retaining walls, fences, sidewalks, in-ground pools, gazebos, mailboxes, and even fancy dog houses! Some courts have ruled that irrigation systems may be included, but it’s always better to make sure your policy language is specific to your situation. Also, it’s important to know that Coverage B only applies to other structures on the premises of your residence.
What about that hot tub or above-ground pool? Those are covered under Coverage C, “Personal Property.”
Which Perils Are Covered for These Structures?
Since detached structures are likely quite different from your house, it could be that Coverage B protects them from a different set of perils. A guest house is an example of a structure that’s likely protected just like your main house — but not necessarily, which is why it’s important to ask. A detached garage is less likely to have plumbing, so it may not have protections around water damage.
Think about whatever structures you’re protecting, and consider their specifics. For example, greenhouse repairs present very different challenges than pool repairs. Speaking of pools, many insurers handle pool coverage differently. So that’s definitely something to ask about when consulting your agent.
Finally, think about the locations of your other structures and any specific hazards relative to those locations. For example, in earthquake-prone areas or places where hurricanes are a regular event, policies may have exclusions.
What Are the Limitations of My Coverage?
Coverage limits can vary. While some policies offer 10% of the dwelling (Coverage A) limit, some insurers may default to 2%.
If you’re thinking about using that outside cottage for Airbnb, that may not be covered automatically. If you’re thinking about using it for business purposes — who wouldn’t love a quiet detached office to work-at-home in? — you should especially consider increasing your Coverage B levels. Going cheap now could be disastrous later.
Is All My Stuff Covered, Too?
What about the personal property you store inside detached structures? The stuff inside your “she shed,” guest cottage, and so on would actually be handled under Coverage C, “Personal Property.”
Before you go looking up what a “she shed” is, just think about a pool shed or a greenhouse. Realize how much equipment is stored out there, just waiting to get stolen. Since many homeowners save a few bucks by NOT installing security systems on detached buildings, it’s a good idea to closely review Coverages B and C when talking to your agent.
Why Is Coverage B Separate from Coverage A?
Why do we have Coverage B? As construction patterns changed around the 1970s, homeowners didn’t want to pay for detached garages. They simply weren’t being built any more. More homes were built as single structures, so insurance providers offered policies with rate credits to cover dwellings by themselves.
Isn’t Coverage B Less Important than Coverage A?
Coverage B is potentially a vital component of your homeowners policy! Think about the outside structures on your property — that fence that keeps the neighbors’ dogs out, that she shed that houses your sweet motorcycle, or that fancy mid-century mailbox — and how important they are to your personal comfort. Then, consider talking to an agent about what’s covered, and whether you’re as protected as you can be. In many cases, policies can be endorsed to fix any gaps in coverage.
What may seem expensive and extraneous now could feel cheap and entirely necessary after that tree falls, smashing your detached garage to bits. So make sure you’re covered!
Have questions about your “Other Structures” coverage? One of our expert advisors will be happy to talk with you or do a free policy review. Give us a call at (303) 302-9927 or drop us a line!