Insuring detached structures

Initially all Homeowners policies extend 10 percent of the residence coverage to detached structures, which will include garages, barns, in-ground swimming pools, decks and so on.

Watch out for two problems:

  • The possibility of underinsurance if the structure cannot be replaced for the 10 percent automatic coverage;
  • Any structure that is used even partially for business is excluded. For example, you are a real estate owner and take care of your buildings yourself, so you keep a lawn mowers or snow blowers that are used for business in your garage. God forbid, a tornado comes through and destroys this garage. The insurance company could deny the claim, because of the stored business equipment.

To avoid these kinds of problems you can:

  • Get an additional coverage for your detached structures; make sure the limit equals the total replacement value of all detached structures on your premises;
  • You must request an endorsement to your Homeowners policy that permits the use of detached structures for business or have business insurance purchased. Consult your agent.