What Is Other Structures Homeowners Insurance?

Coverage B, also known as other structures, is one of the six major homeowners insurance coverage policies. This type of home insurance will insure you against damage to, or destruction of, detached structures such as garages, barns, fences and swimming pools.

As a result, this type of policy tends to apply to those who have a front and/or rear garden in which they have a detached structure that could potentially represent a significant financial loss if it were to be damaged or destroyed.

If you do not have such structures around your property, then you would not benefit from taking out this type of policy. It is also important to note that a Coverage B policy does not apply to rental properties, only properties that you own.

To find out more about the other types of homeowners insurance policies, please see the articles below:

Coverage A (Dwelling) Homeowners Insurance
Coverage C (Personal Property) Homeowners Insurance
Coverage D (Additional Expenses) Homeowners Insurance
Coverage E (Personal Liability) Homeowners Insurance
Coverage F (Medical Payments) Homeowners Insurance

The following videos also provide some very useful information about home insurance in general.

In the rest of this article, we will look over some of the main points relating to homeowners other structures insurance, and how to receive the maximum benefit from it.

Other Structures Home Insurance

Almost all coverage A homeowners insurance policies extend a 10% coverage to detached structures. For example, if your house is insured for $100,000, then you will receive $10,000 worth of coverage for any detached structure that you have. This is provided automatically with a coverage A policy and at no additional cost.

However, using a coverage A policy to insure your detached structures has two major disadvantages. The most obvious is that it could leave you underinsured.

For example, if your structure cannot be replaced or repaired for the 10% coverage that you get under coverage A policy, then you will have to pay the remaining balance for the repair or replacement of the structure by yourself.

The second, and lesser known disadvantage of using other structures insurance for insuring detached structures, is that if your detached structure is used, even partially, for business purposes, or is connected to a business in any way, it will be excluded from your policy agreement.

Insuring Yourself Against Risk

Both of the previously mentioned points are worth knowing about, as depending on your situation, you may be able to save yourself some money insuring your property.

If you have detached structures around your home that could be insured under the 10% coverage provided by your coverage A policy, then there will be no need to take out additional coverage as this would not provide you with any additional financial benefit.

You may even decide to take a risk, and purposefully underinsure your detached structures. The advantage of doing this is that overall you are insuring yourself at less personal expense, thereby helping you to save some money each month on the premiums that you pay to maintain your policy.

Of course, this will leave you at risk to suffering from an uninsured loss, but providing you are not underinsured by too much, then taking on this added risk could very well be worth doing.

Where you do not want to take this type of risk is if you are underinsuring yourself by a significant margin, as that will leave you exposed to a large financial loss, in which case, paying a little bit extra for a coverage B policy to provide you with full insurance protection is probably in your best interest to do.

Combining Coverages A With B

If you have a valuable detached structure, such as a garage, which is not fully covered by the automatic 10% coverage provided to you by your coverage A homeowners insurance policy, then it is advisable to insure the remaining balance with coverage B other structures insurance.

Adopting this approach will ensure that your detached structure is fully insured, and could save you having to pay out thousands of dollars of your own money at a later date should that structure ever be damaged or needs to be replaced.

However, be careful in what type of structure you insure. For example, if you own a business and use your garage to store business equipment, or even work out of your garage, then any insurance claim you make could be denied entirely because that structure was associated with business use.

So even though you may have a detached structure fully insured, it is pointless doing so with a coverage B policy if it related to your business.

Why Are There Such Limitations?

The scenario that was just described certainly does not seem fair, especially if you have spent money over several years thinking that you are being provided with protection on a structure when in fact you are not.

One of the justifications given for all the limitations and exclusions commonly found in homeowner’s insurance policies, is the nature of the insurance business and the way that it works to protect people against loss.

An insurance company collects money in the form of premiums from individuals who wish to protect themselves against specific losses. The money paid to insurance companies is then stored in a pool, which is then later used to provide compensation for people who make a claim.

Insurers also make a profit from this pool, so as long as they are able to pay out less than they collect.

This is the very basis of insurance, protecting a group of individuals from similar risks. The key word here is similar, because from the insurance company’s perspective, it is important that the people who share losses all face the same kinds of risk. This way, people who face greater risks are not being subsidized by people who have lower risks.

For example, people who own expensive jewelry make many more jewelry claims than the average homeowner. If jewelry claims in a homeowners insurance policy was unrestricted, then it could affect the rates of non-jewellery owners causing the rates to go up every time a claim was made.

Thus the exclusions and limitations that are found in homeowners insurance policies are designed to ensure that premiums will be fair to all payers. So overall, everyone benefits from a standard level of protection, and if you require greater protection because you face greater risk, then there is always the option to purchase an additional extended policy that insures you against a specific loss.

This brings to light a very important point about insurance policies as a whole. If you are looking to have something insured, always make sure that you fully understand what is covered and what is excluded or limited in the basic insurance policy. You will then be able to determine how much additional coverage you need to take out, if any at all.

With regards to coverage B other structures insurance, you should therefore check to see if detached structures related to business use have any limitations or exclusion associated with them before signing your policy agreement.