The 10% Problem: Insuring Everything on Your Property That Isn’t the House
By The NMH Agency Team, Licensed Agent
There’s a default setting buried in every homeowners policy that was
calibrated for a suburban lot with a fence and maybe a shed, and it’s
still being applied to properties with detached garages, workshops,
barns, well houses, gazebos, and a quarter mile of fencing. It’s called
other structures coverage, Coverage B on your declarations page, and its
default, typically 10 percent of your dwelling coverage, is one of the
most commonly outgrown numbers in personal insurance.
Let’s walk the property line.
What counts as an “other
structure”
The dividing rule is simple: structures on your property not
attached to the house. Detached garages and carports, sheds and
workshops, fences and gates, gazebos and pergolas, in-ground pools and
their equipment in many policies’ treatment, well houses and pump
houses, barns, greenhouses, even the mailbox masonry. Attached
structures, an attached garage, a deck bolted to the house, live under
your main dwelling coverage instead; the attachment point literally
determines which bucket pays.
These structures are covered against the same perils as your house:
fire, wind, hail, falling trees, vandalism. So far, so good. The catch
is never the perils. It’s the limit.
The default math, and how it
fails
Coverage B defaults to 10 percent of Coverage A at most carriers.
Insure the house for $300,000, and everything else on the property
shares a $30,000 pool. For the suburban fence-and-shed lot, fine. Now
run it for the properties we actually quote every week:
A $250,000 dwelling with a $45,000 detached garage built two years
ago: the 10% default leaves a $20,000 hole in a total-loss scenario. A
rural place with a $30,000 pole barn, a $12,000 workshop with power, a
well house, and $15,000 of perimeter fencing: the structures total
$60,000 against a $28,000 default. A hobby-farm fence line alone can eat
the whole limit; wind and vehicle strikes make fence claims genuinely
common, and long runs of quality fencing reprice dramatically fast.
The failure mode is quiet because nothing warns you. The garage went
up, the contractor got paid, and no document anywhere says “your
policy’s Coverage B is now half what your outbuildings are worth.” That
accounting is on you, or on an agent who asks the right questions.
The five-minute audit
Stand in the yard and price a rebuild of everything that isn’t the
house: each building at contractor-built replacement cost (not what it
cost in 2009), fencing at current per-foot installed prices (ask anyone
who’s bought fencing lately; brace yourself), pool decking and
equipment, the works. Compare the total to the Coverage B number on your
dec page. If the structures win, the fix is a phone call: Coverage B can
be increased above the default, cheaply, since these limits price
modestly. Specific high-value structures can also be scheduled
individually where that fits better.
Three fine-print
flags while you’re out there
Business use changes everything. Other structures
used for business are commonly excluded from Coverage B
entirely. The detached garage housing your woodworking side business,
the barn with your landscaping equipment, the shed that’s really
inventory storage: these need a conversation, and often an endorsement
or separate coverage, before a fire makes the exclusion vivid. We’ve
written about home business gaps separately; the outbuilding version is
the one people miss most.
What’s inside the structures is a different
coverage. Coverage B rebuilds the shed; the $8,000 of tools
inside it are personal property under Coverage C, with its own limits
and, for some categories, special sub-limits. A serious tool collection,
mowers and tractors (which have their own insurance quirks above certain
sizes), or anything valuable living in an outbuilding deserves its own
accounting.
Condition matters. Carriers photograph properties
now, from the street and the sky. A collapsing barn or derelict
outbuilding can draw underwriting attention to the whole policy;
structures past saving are sometimes better demolished than insured. And
normal wear, rot, and deterioration are excluded here as everywhere;
Coverage B responds to events, not entropy.
The takeaway
Coverage B is a default that assumes your property is average. If
you’ve added structures, if you’re rural, if there’s a real garage or
barn or serious fencing out there, the default deserves an audit it has
probably never gotten. It’s among the cheapest limits to raise and among
the most annoying to discover short, since the discovery scenario is a
tornado that took the garage and revealed the gap on the same
afternoon.
Walk the yard, add it up, and tell us the number. Truing it up
usually costs less per year than one fence panel.
Got more than a lawn out there? Call 800.388.6780 or request a homeowners
review and we’ll audit Coverage B against what’s actually
standing.