Other Structures Coverage: The “Other” Property Coverage You Need
We’ve all heard of homeowners insurance, but there’s another type of coverage that often gets overlooked: Other Structures coverage. You may not know it by name, but if you own a home or other property, it is an essential piece of your coverage and could end up saving you from major financial losses should something happen to any structures on the premises—be it a tool shed or detached garage.
Homeowners often wish to remove the coverage because they don’t have a shed or detached garage on their property, but they rarely request more coverage due to the cost of structures on their property. In this blog post we’ll explore what exactly qualifies as an “other structure,” how coverage is provided, and how to determine how much Other Structures coverage you need.
What are Other Structures?
Other structures in general are any man-made structures separated from your dwelling by a clear space, including but not limited to a detached garage, shed, guest house, outdoor kitchen, or entertaining area. It can also include sidewalks, patios, swimming pools, driveways, fences, retaining walls, and sprinkler systems. All of these items can be damaged by perils covered by your homeowner’s policy but may require further review to determine the best way to insure them.
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Who Needs Other Structures Coverage?
It’s safe to say that almost everyone needs Other Structures coverage. A homeowners policy provides this coverage, which is automatically 10% of your dwelling coverage, at no charge. Some carriers even increase this limit cost-free, so check with your agent or insurance carrier to see what they offer you.
Automatic Percentage on Other Structures Coverage
The automatic percentage on Other Structures coverage is both good and bad. The good thing is the policy recognizes almost everyone needs at least some coverage for other structures and provides it automatically at no cost. On the other hand, because it’s provided automatically, many people don’t consider whether or not the coverage provided is enough.
How much Other Structures coverage is enough?
Let’s say your home is insured for $250,000, and your policy provides 10% of this coverage for other structures. That’s $25,000 of coverage automatically. If you have a covered barn or a large shed and a two-car detached garage with a living area above it, this may not be enough coverage. Barns are typically expensive to build and a garage with a living area above it (such as an entertainment area or office) can be pricey depending on the size and materials used.
It’s always a good idea to take stock of your detached other structures and assess whether or not the coverage provided on your policy is enough to cover everything. If your home were engulfed in flames, there’s a good chance these outbuildings may also catch fire depending upon their proximity to your home. You want to ensure there’s enough coverage to go around in a worst case scenario.
What if the Automatic Percentage is not enough coverage?
You can add Other Structures coverage to your homeowners policy for an additional charge. It’s important 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 that 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.
Learn more about the difference between replacement cost and Actual Cash Value here.
Automatic Percentage on Other Structures Coverage
Other Structures coverage can come into play in various ways as part of your homeowners property coverage and is an important step in evaluating your insurance needs. So the next time you are puttering around your yard, take stock of the other structures on your property and contact your insurance agent to discuss whether or not you should increase your Other Structures coverage to ensure you’re adequately protected.
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.
