A traditional homeowners insurance policy does include coverage for “other structures” on the property. You will not find this coverage on HO-4 (renters) and HO-6 (condo) policies as the insured usually doesn’t own the other structures in these cases.
What is considered an “other structure?”
A structure that is not part of the main house, but that is on the same property, can be considered an “other structure” under Coverage B of your homeowners insurance policy. The structure can’t be attached to the home and there must be clear space between the two. Exceptions to the rule include any area used for a business purpose or buildings that are rented for tenants to live in. An easy example of this rule: a structure used as a guest house is covered. The same structure used as a rental property is not and would need separate coverage.
How much coverage do I have?
The Coverage B section of your homeowners policy, for other structures, is usually 10% of the Coverage A amount you have for your main dwelling. If your main dwelling is insured for $200,000 under Coverage A, you would then have $20,000 under Coverage B for other structures. While most sheds and garages usually fall comfortably within these coverage limits, you may want to double check the values if you have a large, detached multi-car garage, a guest house, or multiple detached structures.
Most insurance companies will not allow you to increase your Coverage B limit in general. Most will instead allow you to purchase specific endorsements for structures that are higher in value or for those that don’t quite fall into the scope of the Coverage B definition.
While the Coverage B limit is automatically calculated at 10%, do not accept this limit if you feel you are underinsuring the other structures on your property. Have an open conversation with your insurance professional about your needs and find a solution that ensures you have the right coverage to replace all structures on your property in the event of a loss.