The Quiet Homeowners Insurance Limit That Can Cost You Real Money

The Quiet Homeowners Insurance Limit That Can Cost You Real Money

When most homeowners think about their insurance, they naturally focus on the house itself. But what about the other structures on the property, such as a detached garage, barn, dock, fence, swimming pool, gazebo, pavilion, or shed?

That is where Coverage B, commonly called Other Structures coverage, comes into play. It is a standard part of many homeowners insurance policies, but the default limit may be much lower than the actual value of the structures on your property.

What Is Coverage B?

Coverage A on a homeowners policy generally covers the dwelling itself. Coverage B is designed for qualifying structures on the insured property that are separate from the home.

A common starting point for Coverage B is around 10% of the Coverage A limit. For example, if your home is insured for $500,000, your policy may include approximately $50,000 in coverage for other structures.

That may sound like plenty until you start adding up everything outside the house.

One Limit May Have to Cover Everything

Coverage B can apply to structures such as:

Detached garages
Barns
Sheds
Fencing
Gazebos and pavilions
Docks
In-ground pools
Other qualifying detached structures

One important detail is that the Coverage B limit generally applies collectively to all covered other structures, rather than giving each structure its own separate 10% limit.

If you have a barn, dock, fence, and pavilion, for example, they may all be relying on the same Coverage B limit.

That can create a significant gap after a major loss.

How a Coverage Gap Can Get Expensive

Consider a home insured for $400,000 with a standard 10% Coverage B limit. That would provide $40,000 for qualifying other structures.

Now imagine there is a detached structure on the property with a replacement cost of $100,000. If a covered loss completely destroys it and the available limit is only $40,000, the homeowner could potentially be left with a substantial amount that is not covered.

The good news is that Coverage B can often be increased. The key is making sure your insurance agent knows what is actually on the property and what it would cost to replace it.

Location and Use Matter Too

Having enough insurance on a structure is only part of the equation.

Where the structure is located and how it is being used can also affect coverage. Coverage for other structures is generally intended for structures associated with the insured residence premises. A building located somewhere else may require a separate policy or endorsement.

How the building is used is also important.

A detached garage used personally may be treated very differently from a building being rented to someone, used for a business, or used as part of a farming operation. These situations can create both property and liability issues that need to be discussed with your insurance agent.

Simply owning a structure does not necessarily mean your homeowners policy automatically covers it in every situation.

Building Something New? Call Before Construction Begins

Another common mistake is assuming a structure under construction is already covered by the homeowners policy.

Homeowners insurance is generally designed around completed residential structures. A new detached garage, barn, or similar project may require builders risk coverage while it is being constructed.

Once the project is completed, your agent can review how the new structure should be added to your homeowners policy and whether your Coverage B limit needs to be increased.

Even major remodeling projects are a good reason to contact your agent before work begins.

Don’t Forget About Farms and Livestock

Properties in North Georgia and Western North Carolina can also have exposures that do not fit neatly into a standard homeowners policy.

Barns, fencing, equipment, acreage, livestock, and farming activities may require additional endorsements or even a separate farm policy.

Liability is especially important. If a horse, cow, or other animal escapes the property and causes an accident, the resulting liability may not automatically be covered by an ordinary homeowners policy.

Take a Walk Around Your Property

One of the easiest ways to review Coverage B is simply to walk around your property and look at what you actually own.

Think about what it would cost today to replace your detached garage, barn, dock, fencing, pool, pavilion, or other structures. Then compare that total with the Other Structures limit shown on your homeowners policy.

If the numbers do not match, it may be time for a coverage review.

Call Moore Insurance Services and let our team review your homeowners coverage with you. We can help identify potential gaps and make sure your policy reflects the property you actually have, before a loss turns an overlooked limit into an expensive surprise.