Coverage B – Other Structures
In order to properly evaluate insurance coverage you are considering for purchase, or to review your existing coverage to ensure you are adequately protected from storm damage, it’s important that you understand the different categories of coverage contained in standard homeowner’s insurance policies.
Coverage categories refer to the type of property or situation covered rather than the type coverage or the amount coverage for which that property or situation enjoys.
For example, Coverage B outlines the type and amount of coverage you have for structures on your property that are not part of or attached to your home (like a detached garage for example) while Coverage A in a policy outlines the type and amount of coverage for your dwelling (i.e. your main house). Often, each coverage category may have different types and amounts of coverage.
When discussing particular coverage, the first step you should take is to identify the category of coverage you are discussing or evaluating. After you know you are looking at Coverage B that relates to the other structures on your property, for example, then you can intelligently evaluate if the type and amount of coverage is adequate.
Other Structures Insurance Considerations
Should your property be damaged by a severe storm or other disaster, Coverage B in your policy will determine whether you are entitled to insurance reimbursement and, if so, how much you are paid for repair or replacement. Here are a few things you need to consider about Coverage B when purchasing new coverage or assessing existing coverage for adequacy.
- For what causes of damage are my other structures covered? HO1 and HO2 policies cover your other structures for damage caused by a fixed list of named perils such as hail storms or fire. If a type of peril, say flooding, is not listed as a named peril, your other structures would not be covered. HO3 and HO5 policies, on the other hand, cover your other structures for any cause except those perils expressly listed and excluded. Common listed exclusions include flooding, earthquakes, and war. In many cases you can add excluded coverage for your other structures by buying additional policies or adding a rider to your main policy.
- How will the dollar amount of damage to my other structures be calculated? In most standard home insurance policies, value for damage to your other structures under Coverage B is calculated based on replacement value. In other words, you would be paid to repair or replace you home based on how much it would cost to complete the repairs using materials of similar quality to what was damaged.
- For how much are my other structures covered? The amount of coverage included in Coverage B for other structures is set by default at 10% of your Coverage A amount. For example, if for your Coverage A was set at $200,000 your Coverage B would be set at 10% of $200,000 or $20,000. Your Coverage B limit can be set higher by endorsement. If you have other structures on your land that are worth considerably more than 10% of your home, discuss increasing your Coverage B limit with your broker.
Condo and renters insurance policies do not contain Coverage B as condo owners and renters rarely own or have responsibility for other structures on the land.