Reviewing and adjusting other structures coverage is an essential part of maintaining a homeowners insurance policy, yet it is often overlooked. Because Coverage B is typically set automatically as a percentage of the dwelling coverage limit, many homeowners assume it is always sufficient. Over time, however, changes to the property, construction costs, and risk exposure can make default coverage limits inadequate. A deliberate review process helps ensure detached structures are properly protected before a loss occurs.
The first step in reviewing other structures coverage is identifying everything that qualifies as an other structure on the property. This includes detached garages, sheds, fences, workshops, gazebos, pergolas, greenhouses, and similar standalone buildings. Homeowners should walk the property and create a complete list of all detached structures, including approximate size, construction type, and use. Structures that are easily forgotten, such as long sections of fencing or small storage buildings, can represent significant rebuilding costs when added together.
Next, homeowners should estimate the cost to rebuild each structure, not its market value or original construction cost. Rebuilding cost reflects current prices for materials, labor, and permits. Online calculators can provide rough estimates, but local contractors often offer more accurate insight, especially for custom or larger structures. The goal is to understand how much it would cost today to rebuild everything from the ground up after a total loss.
Once rebuilding costs are estimated, homeowners should compare this total to the current other structures coverage limit listed in their policy. If the combined rebuilding cost exceeds the limit, coverage is likely insufficient. This is common on properties with multiple detached structures or larger lots where fencing and outbuildings add up quickly.
Homeowners should also review the valuation method used for other structures coverage. Some policies settle Coverage B claims on an actual cash value basis, which subtracts depreciation. Others provide replacement cost coverage, either automatically or through an endorsement. If actual cash value applies, homeowners should consider whether depreciation would significantly reduce claim payouts and whether upgrading to replacement cost coverage is appropriate.
Another key review area is deductibles. High deductibles, especially percentage-based wind or hurricane deductibles, can reduce the effectiveness of other structures coverage. Homeowners should confirm how deductibles apply to detached structures and evaluate whether the out-of-pocket cost would be manageable after a loss.
Excluded risks should also be evaluated during the review process. Flood, earthquake, and earth movement damage are typically excluded from standard other structures coverage. Homeowners should assess whether their property is exposed to these risks and whether separate policies are needed to protect detached structures.
Use of detached structures is another important consideration. Structures used for business purposes may have limited or no coverage under a standard homeowners policy. If a detached building is used for work, storage of business equipment, or income-generating activities, homeowners should review coverage terms and consider additional insurance.
Homeowners should also evaluate building code exposure. If rebuilding a detached structure would require compliance with updated codes, standard coverage may not pay for required upgrades. Ordinance or law coverage may be needed to address this gap.
Adjusting other structures coverage typically involves increasing the coverage limit, adding endorsements, or both. Increasing Coverage B limits raises premiums, but the cost is often modest compared to the potential financial risk of underinsurance. Endorsements may also be available to schedule specific high-value structures separately.
Reviews should occur annually and after any significant property changes, such as adding a new structure, expanding an existing one, or upgrading materials. Regular reviews help ensure coverage keeps pace with changes and avoids surprises during claims.
Understanding how to review and adjust other structures coverage empowers homeowners to take control of their insurance protection. It shifts coverage from default assumptions to intentional planning, ensuring detached structures are adequately insured when damage occurs.
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