Typically a homeowners insurance policy will include insurance on other structures. It is important to make sure you have enough coverage and to know what is covered.
Definition: Other Structures
"Other Structures" is defined by the insurance industry as structures which are on the property and separate from the home. They might be buildings, or they could be fencing or cement work around the home. For example, "Other Structures" can include:
- Detached garages
- Storage sheds
- Guest houses
- Pool houses
- Swimming pools
- Retaining walls
To be covered under the homeowners policy the structures must be used for personal -not business- purposes. Structures used for business need to be covered under a business insurance policy. An insurance agent can help the insured understand which structures are, or are not, covered. Be sure that you and your insurance company agree on the use of a structure before you need to file a claim. It is not uncommon for there to be confusion in certain situations:
- Storage sheds which are used to store the home's garden equipment would be covered; however, a storage shed used to store garden equipment for a landscaping business would not be covered under the homeowner's basic homeowners insurance policy.
- Barns to store supplies for animals would be covered; however, they would not be covered in the animals were kept for profit.
Coverage: Insurance on Other Structures
The standard coverage level is 10 percent of the total coverage for the homeowner's insurance policy. If the policy includes $200,000 in coverage for the home, the policy would include $20,000 in coverage for "Other Structures."
This may sound like a lot of coverage to replace a garden shed; but, it may not be enough to replace a swimming pool or an extensive retaining wall structure. Additionally, if you have large garages, multiple backyard buildings and extensive cement work, you may find that the standard level of 10 percent of total home coverage is not enough if you encounter a loss.
Insurance on "Other Structures" is designed to replace the structure back to the orginal state when it was built. Homeowners should be sure that they know the current cost to make repairs and replacements that might be required in the event of an insurance loss. Remember, things might have changed since the structure was built:
- Construction and materials prices have increased. Be sure that the insurance coverage is enough to cover current costs.
- Building codes and requirements may have changed. Replacing the building in a way to meet the current building codes (e.g., with a higher grade of wiring) will probably increase the cost of replacement.
It is important for homeowners to make sure that they have enough coverage to pay for the replacement of the structure. If the standard policy doesn't have enough coverage, additional coverage can be arranged with the insurance company.
Know What You Have and Need
Be sure to review a new or existing policy to make sure you have enough insurance on other structures to replace the structure around your property. The basic coverage limits may not be enough. Know what it will take to replace what you have. Get estimates. Share the information with your insurance agent. Add additional coverage if necessary. Don't wait until you have to file a claim to find out that you don't have enough insurance.