Homeowners insurance and other structures coverage
You can notice something called coverage B – also known as other structures coverage, if you have just registered in homeowners insurance. Although it sounds pretty vague, it is really simple.
"Other structures" means property which is not connected to your home structure (which is your dwelling, or Coverage A). Other structural coverage is essentially an extension of your dwelling coverage. It is not part of condo insurance or renters insurance policies and is exclusive for homeowners insurance.
We will look at the details, how your property is safeguarded, and what its limitations are.
How does other structure coverage work?
Your home insurance policy includes more than just your home structure. Other structural coverage covers each homeowner policy and includes detached property, such as fences and sheds. Coverage B applies to separate organizations used for leisure or for personal use only, which are typical of any kind of insurance policy. If you run a home business in the guest house, if you are exposed to a covert threat, it would be exempt - unless you add a commercial approval to add to your coverage.
Payouts are usually based on replacement cost value for other structures, just like your dwelling coverage. This can vary depending on company and policy, however. Some insurers will use actual cash values to calculate the value of your loss.
Examples of other structures covered by homeowners insurance
As mentioned above, detached properties such as fences, sheds and guesthouses have other structures. The following are also included:
- Detached patios
- Detached garages
- Gazebos
- Sheds
- Barns
- Mailboxes
- Pools in the ground (depending on your insurer, swimming pools may be covered under the dwelling provision of your policy instead)
How much coverage do I need for other structures?
Your coverage limit depends on your coverage limit for Coverage A for other structures. Cover A refers to your home structure — your dwelling — and is the cornerstone of your home insurance policy. Your limit for coverage B is calculated as a percentage of your limit for coverage A; 10 percent of the default. Therefore if your home is $200,000 insured, you will be covered by $20,000 for other facilities.
What perils does Coverage B cover?
The risks to your home coverage apply to other structures as well. If you have a HO-2 homeowners policy, your property is protected against the 16 standard hazard names that are considered covered losses:
- Fire or flash
- Windstorm or Hail
- Damage from aviation
- Bursts
- Unrest or civil unrest
- Smoke damage
- Damage from vehicles
- Robbery
- Vandalism
- Objects falling
- Volcanic rash
- Snow, ice or sleet weight damage
- Plumbing, heating or air conditioning damage Water damage
- Crack, tear, and burn water heater
- Electric current damage
- Freezing of pipes
The coverage of HO-3 and HO-5 homeowners has been broadened because these are open peril policies. This means that any peril is covered – including the above mentioned peril – unless specifically excluded.
Exclusions for Coverage B: what is not covered by other structures coverage?
Even with a more extensive homeowners' insurance policy, the insurance cover always excludes. These exclusions apply to all your properties — your dwelling and personal property coverage — in accordance with your policy. Home insurance does not cover the following perils:
- Flood — homeowners can purchase flood insurance separately.
- Hurricane
- Mold
- Vandalism to vacant dwellings
- Wear and tear
- Property damage caused by pets
- Earthquakes — homeowners can purchase earthquake insurance separately.
- Enforcement of building codes and similar laws
- Intentional acts
- Neglect
- Government acts
- Nuclear hazard
- Off-premises power failure
It is also important that any property used for business purposes — such as the operation of an Airbnb outside the guest house — is not covered.
Do I need other structures coverage?
Let's say your property has no many detached structures outside apart from your home and you don't think this coverage is needed. Unfortunately, you won't be able to take Coverage B off your homeowners' policy completely. This is because the coverage of other structures is part of a package deal — and therefore no additional premium is charged.
Homeowners tend to underestimate their own property; this also applies to other structures. You may not realize that your home has additional structures until you have to make a claim. Cover B ensures that you are adequately protected by replacing everything that you have lost — not just the structure but everything around your home as well.
How to increase insurance coverage for other structures
It would be in your best interest to increase the B coverage if 10 percent of your dwelling limit would not be enough to replace additional structures around your home. By increasing your dwelling coverage A limit, you will increase your dwelling coverage B limit.
Let us take our previous example of a limit for $200,000 and another $20,000. You will have to increase your dwelling value to $400,000 if you need double the coverage to cover a separate newly-built patio and garage to raise your other structure's coverage to $40,000.
Increasing your home insurance coverage is never bad – it is a great way to protect your investment as long as it's affordable. It's worth shopping for a better rate if you're unhappy about what you're paying.