That Detached Garage Isn’t Covered as Much as You Think. The Coverage A vs. B Problem.
My Garage Was Worth More Than My Policy Would Pay.
I have a beautiful, detached two-car garage with a workshop above it. I always assumed it was fully covered by my homeowners insurance. After a fire, I discovered the truth. My policy’s Dwelling Coverage (A) for my house was $400,000. But the Other Structures (B) coverage for my garage was automatically set at only 10% of that, or $40,000. The cost to rebuild my garage was over $70,000. I was left with a massive, unexpected bill because I didn’t understand this simple but critical distinction in my policy.
How Your “Other Structures” Coverage is Just 10% of Your Dwelling Coverage.
The Automatic Limit That Might Not Be Enough.
A standard homeowners policy is designed with a simple formula. Coverage A (Dwelling) is the amount needed to rebuild your main house. Coverage B (Other Structures) is then automatically calculated as 10% of your Coverage A limit. So, if your house is insured for $500,000, your policy provides a default of $50,000 for all other structures on your property combined. For a simple shed, this is plenty. For a large, detached garage, a guesthouse, or an expensive fence, it could be dangerously inadequate.
My $50,000 Workshop Burned Down. My Policy Only Paid $30,000. Here’s Why.
I Forgot to Tell My Agent I Built It.
My house was insured for $300,000, which meant I had an automatic $30,000 of coverage for Other Structures. A few years ago, I built a brand-new $50,000 workshop in my backyard. I never thought to tell my insurance agent. When it burned to the ground, I was devastated to learn I was only covered for the default $30,000. I had underinsured myself by $20,000 because I failed to increase my Coverage B limit after building my new structure. It was a costly and heartbreaking mistake.
The Fence, The Shed, The Pool House: Understanding Your Coverage B Limits.
It’s One Pool of Money for Everything That Isn’t Your House.
It’s crucial to understand that your “Other Structures” coverage is one, single limit for everything on your property that isn’t attached to your main house. This includes your detached garage, your backyard shed, your fence, your in-ground swimming pool, and your guesthouse. You need to do a mental inventory. If a massive storm came through and destroyed all of these things at once, would your single Coverage B limit be enough to replace all of them? If not, you are underinsured.
How to Increase Your “Other Structures” Coverage if 10% Isn’t Enough.
The Simple Phone Call That Can Save You a Fortune.
If you realize that the default 10% limit for your other structures is not enough, the solution is simple. Call your insurance agent. You can easily and affordably increase your Coverage B limit. For a relatively small additional premium, you can raise your limit to whatever amount you need to properly protect your valuable detached assets. It is a simple endorsement, but it’s one that can save you from a massive, unexpected out-of-pocket expense after a disaster.
Is a Fence Attached to the House Part of Coverage A or B? The Answer Matters.
The “Attached vs. Detached” Litmus Test.
The rule is simple. If a structure is physically attached to your main dwelling, it is considered part of Coverage A. If it is a standalone, detached structure, it falls under Coverage B. A deck that is attached to the back of your house is part of your Dwelling coverage. A detached shed in the backyard is an “Other Structure.” A fence that is connected to your house by a gate might be a gray area, which is why it’s crucial to have adequate limits on both coverages.
Don’t Get Blindsided by a Claim Denial on Your Expensive She-Shed.
Your “Happy Place” Needs Real Protection.
You just spent $20,000 building the perfect backyard “she-shed” or home office. Don’t just assume it’s covered. Check your homeowners policy. If your home is insured for $300,000, your default “Other Structures” limit is probably $30,000. This might be enough. But if you also have a detached garage and a fence, that single pool of money might not be sufficient to cover everything. A quick review of your Coverage B limit is essential to protect your new happy place.
A Step-by-Step Guide to Calculating if You Have Enough Coverage B.
A 5-Minute Inventory to Protect Your Assets.
Take a walk around your yard and do this simple math.
- What would it cost to replace your detached garage? (e.g., $40,000)
- What would it cost to replace your shed? (e.g., $5,000)
- What would it cost to replace your entire fence? (e.g., $10,000)
- Add those numbers up. Total needed: $55,000.
- Now, look at your policy’s Coverage B limit. Is it higher than your total? If not, you need to call your agent and increase it.
The Part of Your Policy That Covers Your House vs. The Part That Covers “Everything Else” in the Yard.
The Simple, Core Distinction.
This is the easiest way to think about it. Coverage A (Dwelling) is the big, primary coverage that is designed to rebuild your main house. Coverage B (Other Structures) is the smaller, secondary coverage that is designed to replace everything else on your property that isn’t attached to the house. Knowing that these are two separate pots of money, with two very different limits, is the key to understanding your homeowners policy.
The Common Mistake Homeowners Make After Building a New Shed or Garage.
You Increased Your Assets, But You Didn’t Increase Your Coverage.
The single most common mistake homeowners make is failing to update their insurance after making a major improvement to their property. When you build a new detached garage, a large shed, or an expensive fence, you have significantly increased the value of your “other structures.” You must call your insurance agent immediately and increase your Coverage B limit to reflect this new value. If you don’t, you are creating a massive, uninsured gap that will only be revealed after a disaster strikes.