Does Homeowners Insurance Cover Sheds?

Homeowners insurance policies protect a dwelling and its associated structures against unforeseen events. This coverage helps safeguard a homeowner’s financial interests by offering a pathway to recover costs related to damage or loss. Understanding these policy components is important for comprehensive property protection.

Understanding Other Structures Coverage

Sheds and similar detached buildings are typically covered under the “other structures” portion of a standard homeowners insurance policy. This coverage applies to structures separate from the main dwelling but located on the insured property. Examples include detached garages, fences, and gazebos.

This policy segment is distinct from main dwelling coverage. While dwelling coverage protects the house, “other structures” coverage addresses buildings not physically connected to it. A specific coverage limit applies, often 10% of the dwelling coverage. For instance, if a home is insured for $300,000, the other structures coverage might be $30,000.

Covered Perils and Exclusions

Homeowners insurance generally covers damage to sheds caused by specified perils. Common covered perils include fire, windstorm, hail, and lightning. Protection against theft and vandalism is also typically included, covering losses if the shed or its contents are stolen or intentionally damaged.

However, certain types of damage are usually excluded from standard policies. These often include damage from floods, earthquakes, and earth movement, which typically require separate insurance. Damage caused by neglect, wear and tear, or infestations from pests like termites or rodents is also generally not covered. Mold or rot that develops over time due to lack of maintenance is typically excluded.

Factors Affecting Shed Coverage

A shed’s use can significantly influence its insurance coverage. If used for personal storage or as a private workshop, it generally falls under standard “other structures” coverage. However, using a shed for business operations, such as a home-based business, usually requires a specific endorsement or a separate commercial insurance policy. Renting out a shed also typically alters its coverage status, potentially necessitating different policy considerations.

The shed’s location also plays a role in coverage. For a shed to be covered, it must typically be located on the insured premises. If under construction or not yet fully secured to the ground, its coverage might be limited or require specific provisions. Policyholders should confirm these details to ensure new or temporary structures are adequately protected.

Regarding payouts for damage, policies often differentiate between Actual Cash Value (ACV) and Replacement Cost Value (RCV). ACV provides the depreciated value of the shed at the time of loss, accounting for its age and wear. RCV, conversely, pays the cost to repair or replace the shed with new materials without deduction for depreciation. While the shed structure is covered under “other structures,” personal property stored inside falls under the personal property section of the policy. High-value items, such as expensive tools or equipment, may have specific limits and require additional endorsements to be fully covered.