Does My Homeowners Insurance Cover a Detached Garage or Shop?

For many homeowners, a detached garage or workshop serves as much more than just a storage space. Whether they use it for standard vehicle protection, for DIY projects or even as a home-based business, it’s an essential part of the property. Unfortunately, the fact that it’s not directly attached to the house itself, leaves many policyholders wondering if this extension of their property is actually covered under their homeowners insurance. Today on the Glover Family Independent Insurance blog, we’re going to break down what’s typically included in your coverage as well as what might need additional protection, so that you can ensure your detached structure is fully covered.

The short answer is good news, as a vast majority of homeowners insurance policies will typically include “other structures” in their coverage. That means your protection is extended to things like fences and sheds as well as detached garages or workshops. However, the extent of that coverage will depend on several factors, so it’s important to keep them in mind.

• Policy Limits — The coverage amount for other structures is usually set at 10% of the home’s insured value. For example, if your home is insured for $300,000, then your detached garage or shop may only be covered up to $30,000. This will vary by insurer and policy type, but it’s crucial to check so that you know if the whole cost of your structures are covered.
• Covered Perils — Most policies protect detached structures against common risks like fire, wind damage, vandalism and theft, but coverage specifics depend on your policy type.
• Usage & Business Activities — If you use the garage or shop for commercial purposes, your standard policy may not cover business-related losses or damages.

Now that we’ve given you the rundown on what’s typically covered under standard policies, it’s important that we also highlight a few things that are decidedly NOT covered under most standard policies.

• Business Use & Equipment — If you work from home and operate any type of business out of your detached structure, such as a mechanic shop or a woodworking business, your homeowners policy likely won’t cover damages related to business operations, as that will typically require a separate business insurance policy or a specific rider.
• Expensive Tools & Specialized Equipment — Going hand in hand with what we discussed as far as policy limits are concerned, any high-value tools and equipment that you might store in your detached structure may exceed the standard coverage limits of your policy. If you have high-value assets in your structure, you may want to consider a separate commercial policy or a personal property rider.
• Flood & Earthquake Damage — Unfortunately, most homeowners insurance policies do not cover flood or earthquake damage at all, not even for your house itself let alone extra structures on your property. If you live in an area prone to these risks, you should consider a separate flood or earthquake policy.

The first step in making sure that your detached garage or shop has the protection it needs is to review your “other structures” coverage limit. Check your policy and discuss this topic with your agent to confirm the coverage percentage and limits for detached structures. Compare that to the value of your structure to determine whether or not you should increase your coverage to avoid out-of-pocket expenses in the event of something happening.

You should also consider making a separate, detailed list of any expensive items stored in the detached structure. Include power tools, automotive lifts, specialty electronics and so on. Then ask your provider about personal property endorsements or other specific riders to make sure that these high-value items are covered.

Finally, consider business insurance for commercial use as well as disaster coverage if either thing might fit your specific situation and circumstances. If you’d like to discuss a new policy or any of the topics covered in this blog, please feel free to contact us as we’d be happy to help!