When it comes to homeowners, landlord, or similar home policies, you will usually see a line-item referencing “Coverage B” or Other Structures coverage. There is usually a limit associated with this coverage. We get asked many times what exactly this coverage is, what some examples are, and what changes can be made to it. At the surface, it is coverage that provides protection for structures on your property that are not attached to the main building/home, such as sheds, fences, and detached garages.
Why You Need Other Structures Coverage
Other Structures coverage, or Coverage B, provides protection in case of damage or destruction caused by events/perils such as fire, windstorms, and vandalism. Depending on the type of policy you have, these types of perils could be broader.
If these types of events occur and your detached structures are damaged or destroyed, then this type of coverage will help cover the cost of repairs or replacement without having to dip into your own pocket. Not only does this type of coverage give you peace of mind in knowing that you have financial protection if disaster should strike, but it can also be an incredibly useful tool when it comes to budgeting for home repairs.
Where Coverage Gaps Occur
In general, the limit, or maximum that a policy will pay for Coverage B, is calculated as a percentage of what your home’s replacement cost estimate is. Many times we see it as a base percentage of 10% or 20%.
So if your home has a replacement cost estimate of $400,000, then your policy might have $40,000 of Other Structures coverage. In some cases, this could be adequate! However, let’s say you have a detached 3 car garage as well as two storage sheds on your property. In that instance, you would most likely be underinsured in the event of a total loss to those structures.
One other common coverage gap is the valuation method used for determining payout on a loss for the Other Structures. Depending on the type of policy you have, you might just have a valuation method of actual cash value as opposed to replacement cost. If you have questions about what this means to you, just ask us and we would be happy to explain!
How Much Does Other Structures Coverage Cost?
Our favorite answer with insurance pricing is, it depends! The cost of Other Structures coverage varies depending on the size and scope of the structure being insured. Like mentioned earlier, if your limits are within the base percentage provided, then the cost is already included in the price for you. Increasing this limit is not a costly thing to do. It is always best to have the right coverage in place. Better to pay a smaller amount now, then a large amount in the event of a claim!
All in all, Other Structures coverage is a great way to ensure that any outbuildings or detached structures on your property are properly protected come claim time. While this type of coverage typically comes at no extra cost beyond the standard homeowners policy premiums you’re already paying, it’s always best to consult with us about what the correct limit is! We have the tools and knowledge to guide you in the right direction and select the insurance product that meets your needs!