When most homeowners think about insurance coverage, they typically focus on protecting their main dwelling. However, many properties include structures like sheds, detached garages, or gazebos that also need protection. These additional structures, known as outbuildings, require proper coverage to ensure you’re fully protected from potential losses. As an insurance broker with years of experience helping Canadian homeowners secure appropriate coverage, I want to explain the essentials of outbuilding insurance.
What Are Outbuildings?
An outbuilding is any structure on your property that stands separate from your main dwelling. These structures can include:
- Detached garages
- Storage sheds
- Garden sheds
- Barns
- Pool houses
- Gazebos and pavilions
- Guest houses
- Workshops
The size of the structure doesn’t determine whether it’s classified as an outbuilding—the key factor is that it’s not attached to your main residence.
How Outbuilding Coverage Works
Most standard homeowners insurance policies include coverage for outbuildings under what’s called “Coverage B” or “other structures coverage.” This protection typically amounts to approximately 10% of your dwelling coverage limit. For example, if your home is insured for $500,000, your policy would provide around $50,000 in coverage for all outbuildings combined.
This coverage protects your outbuildings against the same perils as your main dwelling, which typically include:
- Fire and lightning
- Windstorms and hail
- Theft and vandalism
- Damage from vehicles
- Water damage from appliances
- And other specified risks
Is Your Outbuilding Coverage Sufficient?
While the standard 10% allocation works for many homeowners, it may not be adequate if you have multiple or valuable outbuildings. Consider these scenarios:
- Multiple structures: If you have several outbuildings, their combined value might exceed the standard coverage limit.
- High-value buildings: A professionally built workshop, custom garden shed, or premium detached garage could be worth more than your standard coverage allows.
- Specialized use: If you use your outbuildings for specific purposes that increase their value or risk profile, you might need additional coverage.
To determine if your coverage is sufficient, take an inventory of all your outbuildings and estimate their replacement costs. If the total exceeds 10% of your dwelling coverage, speak with your insurance broker about increasing your limits.
What’s Covered Beyond the Structures?
Outbuilding coverage doesn’t just protect the physical structures—it can also cover certain contents within these buildings. However, there are important limitations to understand:
- Personal property in outbuildings might be subject to lower limits than items in your main dwelling
- Specialized equipment or valuable items might require additional coverage
- Business equipment stored in outbuildings often needs separate business insurance
For example, if you store lawn equipment in your shed, these items would typically be covered. However, expensive power tools or specialized equipment might exceed standard coverage limits and require additional protection.
5 Critical Things Your Insurance Broker Should Know About Your Outbuildings
To ensure proper coverage, make sure your insurance broker has accurate information about:
1. Size and Construction Details
The square footage, construction materials, and quality of construction all impact the replacement cost of your outbuildings. A professionally built structure with quality materials will cost more to replace than a basic prefabricated shed.
2. Heating Systems
If any of your outbuildings have heating systems, your broker needs to know what type they are and whether they were professionally installed. Heating systems can increase fire risk, and proper installation is essential for both safety and insurance purposes.
3. Number of Outbuildings
Be specific about how many separate structures you have on your property. Missing structures from your policy could result in gaps in coverage when you need it most.
4. Recent Updates or Renovations
If you’ve recently upgraded your detached garage, converted a shed to a home office, or made other significant improvements, these changes likely increased the value of your outbuildings and should be reflected in your coverage.
5. Usage Details
How you use your outbuildings significantly impacts your coverage needs. Structures used for business purposes typically require separate commercial coverage. Even hobby activities that could increase risk, such as woodworking, welding, or storing chemicals, should be disclosed to your broker.
Special Considerations for Canadian Homeowners
Living in Canada means dealing with specific regional challenges that can affect your outbuildings:
Winter weather: Heavy snow loads can damage roofs and structures, making proper construction and maintenance essential.
Regional differences: Insurance requirements and costs can vary significantly between provinces, and even between urban and rural areas.
Farm structures: If your property includes agricultural outbuildings, you may need specialized farm insurance rather than standard outbuilding coverage.
When Standard Coverage Isn’t Enough
There are several scenarios where you might need to adjust your outbuilding coverage:
Business Use
If you run a business from your detached garage or workshop, standard homeowners insurance won’t provide adequate protection. You’ll likely need a commercial policy or a home-based business endorsement.
High-Value Contents
Tools, equipment, recreational vehicles, or other valuable items stored in outbuildings may exceed standard coverage limits and require scheduled personal property coverage or endorsements.
Guest Accommodations
If your property includes a guest house or rental unit, you’ll need different coverage than for a standard storage shed or garage.
Making the Most of Your Outbuilding Coverage
To maximize your protection:
- Document everything: Create an inventory of all outbuildings and their contents, including photographs and value estimates.
- Keep receipts: Maintain records of purchases, improvements, and renovations to help establish value in the event of a claim.
- Review regularly: As you add structures or make improvements, review your coverage to ensure it remains adequate.
- Consider replacement cost: Opt for replacement cost coverage rather than actual cash value to avoid depreciation deductions on claims.
Final Thoughts
Outbuilding coverage is an essential component of comprehensive home insurance protection. By understanding what’s covered, properly documenting your structures, and communicating clearly with your insurance broker, you can ensure your entire property—not just your main dwelling—is properly protected.
The small additional premium for appropriate outbuilding coverage provides valuable peace of mind, knowing that all structures on your property are protected against unforeseen events. And remember, most policies include some outbuilding coverage automatically—making sure it’s adequate for your specific situation is the key step many homeowners overlook.
Want to talk to our property insurance experts about your specific outbuilding coverage needs? Give us a call today for a personalized review of your policy!