Your backyard pool may not feature fountains, a waterfall grotto and a 15-foot slide, like a residential pool in Gilbert, Arizona, that the Travel Channel dubbed “the poshest private pool” in the U.S.
But your pool may still require additional coverage beyond your homeowners policy. And that also goes for other examples of what insurers call “detached structures,” including gazebos, storage sheds and stand-alone garages.
Detached structure coverage is limited
Typically, only 10% of your home insurance coverage extends to all detached structures on your property, says Ryan Hanley, an insurance agent with TrustedChoice.com.
That means when a home has $300,000 in insurance coverage, the detached structures on the property are covered for only $30,000. So, if you have multiple detached structures and all are destroyed in a storm or other disaster, you could file a claim for no more than $30,000 to replace all of them.
Average costs of detached structures:
- Barn, shed, playhouse – $2,911
- Gazebo – $7,336
- Greenhouse – $3,587
- In-ground pool – $22,000
- Unattached 2-car garage – $58,432
- Unattached 4-car garage – $86,400
Sources: HomeAdvisor.com and Fixr.com
Determining whether 10% is enough
In that example, you might think that $30,000 sounds like plenty. But it depends on the structure.
If your detached structures need to be rebuilt, you can finance it with an unsecured personal loan, with loan amounts up to $100,000. Check current personal loan rates based on your credit on bankrate.
“Something as simple as slate shingles on the roof of your garage or barn can put you over that 10% mark,” says Hanley. So, if you have any doubt about the replacement value, increase your coverage.
“You can pay as little as $7 a year for an endorsement on your homeowners policy that increases your coverage on detached structures to 25%,” he says.
Detached structure snags
According to Hanley, your detached structure claim may be denied if:
- Your detached structures aren’t on the same parcel of land as your home. This can happen if the land was subdivided in the past.
- Your agent guesses the value of your structures instead of using a replacement cost estimator calculator.
- You haven’t maintained the structure. For example, the garage was already crumbling before a windstorm completely blew it down.
- Your detached structure is used for business.
A typical homeowners policy excludes coverage if business is being conducted on the premises, says Jim Gontjes, a head of product management with Farmers Insurance. That’s because the insurance company doesn’t want to assume additional risk for a liability or property loss.
What is it about business uses?
If you’re running an auto repair or TV repair business out of your garage, you’ve increased your liability, explains Hanley. You’ll need to buy a business liability policy to cover that risk, which would be separate from your homeowners policy.
“If you don’t buy that business policy and you have a fire in your detached structure (garage) that jumps to your home, the insurance company will deny the entire claim,” Hanley says.
Some companies have endorsements to take care of incidental business exposures, while others may not insure at all because of the additional exposure, Gontjes says.
“It is best to communicate with your agent on these business ventures to validate there are no coverage gaps or exclusions,” he says. “Don’t hide what you’re doing, as that could result in a bad claim experience or a claim being denied.”