Does Homeowners Insurance Cover a Detached Garage?

Homeowners insurance provides financial protection for a homeowner’s most significant asset, their dwelling, and the property associated with it. A common inquiry among property owners involves understanding the extent to which their policy covers structures separate from the main house. Detached garages, sheds, and fences often raise questions regarding their inclusion in standard insurance plans.

Standard Coverage for Detached Structures

Most homeowners insurance policies, particularly the widely used HO-3 form, include coverage for detached structures under what is referred to as “Other Structures” coverage. This coverage is often designated as Coverage B on the policy’s declarations page. It protects buildings and structures on the insured property not attached to the main dwelling.

The coverage limit for other structures is a percentage of the dwelling coverage. This percentage ranges from 10% to 20% of the dwelling’s insured value. For example, if a home is insured for $300,000, the detached garage might have coverage of $30,000 to $60,000. This covers the cost of repairing or rebuilding the detached structure after a covered loss.

Perils covered for detached structures typically mirror those for the main dwelling. This includes damage from events such as fire, windstorms, hail, lightning, theft, and vandalism. If a policy covers the primary residence for a specific event, the detached garage is generally covered under the same terms. However, certain perils like floods or earthquakes are almost always excluded and require separate, specialized policies.

Personal belongings inside a detached garage, such as tools, lawnmowers, or sports equipment, fall under personal property coverage, often listed as Coverage C. This portion of the policy covers personal belongings anywhere, not just within the main dwelling. The limits for personal property coverage are 50% to 70% of the dwelling coverage, but specific sub-limits may apply to certain categories of items.

Factors Influencing Detached Garage Coverage

While standard homeowners policies offer coverage for detached garages, several factors can influence or limit this protection. Certain common exclusions apply, meaning damage from specific events will not be covered without additional specialized policies. For instance, damage from floods or earthquakes is almost universally excluded from standard policies and requires separate flood or earthquake insurance. Damage from wear and tear, gradual deterioration, or neglect is also generally not covered, as policies focus on sudden, accidental losses.

The way a detached garage is used impacts its coverage. If the garage is used for a home-based business, such as an auto repair or woodworking studio, standard personal homeowners insurance may not cover business property or liability. Business-related losses may require a separate business insurance policy, like a Business Owner’s Policy (BOP), or a specific endorsement. Without this coverage, a claim related to business operations or property could be denied.

Similarly, if the detached garage is rented out for commercial use, this may fall outside the scope of a personal homeowners policy. Renting out property introduces risks a standard policy is not designed to cover. In such cases, a landlord endorsement or a different type of insurance policy may be necessary for protection. Storing high-value items, such as classic vehicles, extensive collections, or specialized equipment, might also exceed standard personal property limits. These items may require specific scheduling on the policy for full coverage.

Adjusting Your Coverage for Detached Garages

To ensure a detached garage is adequately protected, homeowners should review their current policy’s “Other Structures” limit, typically found on the declarations page as Coverage B. Compare this limit to the estimated replacement cost of the garage, which is the amount to rebuild it after a total loss. An independent appraisal or a contractor’s estimate can help determine an accurate replacement cost. If the standard 10% or 20% of dwelling coverage is insufficient to rebuild the garage, the Coverage B limit can usually be increased through a policy endorsement.

For specific situations, various endorsements enhance coverage. If high-value items are stored in the garage, a scheduled personal property endorsement can provide broader coverage and higher limits, often without a deductible. For small home-based businesses operating from the garage, a home business endorsement may extend limited coverage for business personal property and liability. However, for more substantial business operations or those generating significant income, a dedicated commercial policy, such as a Business Owner’s Policy, is more appropriate.

Understand the difference between Actual Cash Value (ACV) and Replacement Cost Value (RCV) for detached structures. Actual Cash Value coverage pays the replacement cost minus depreciation. Replacement Cost Value coverage pays the cost to rebuild or replace the structure without deducting for depreciation. Ensuring detached structures are covered at RCV helps avoid substantial out-of-pocket expenses if a total loss occurs. Many policies default to ACV for detached structures, so confirming RCV is a proactive step.

Ultimately, discussing specific needs and uses of a detached garage with an insurance agent is highly recommended. An agent can help identify potential coverage gaps, explain policy nuances, and recommend appropriate endorsements or separate policies to protect the detached garage and its contents. This personalized review helps align coverage with the specific characteristics and value of the detached structure.