Additional Structures Coverage

2 Replies

I am buying a rental house that has a detached garage in addition to the attached garage. 

Should I get additional structures coverage for the detached garage? And if so, how should I determine the coverage amount? 

I believe that would typically be covered by the homeowners policy automatically. At least it is on an owner-occupied policy. Im not sure about a dwelling fire policy. 

Hi Nick,

To answer that question you have to look at your own business model and tolerance for risk and self insurance.  A good package will allow you to pick and choose what coverage you want and only pay for what you select along with the limits of insurance you select.

I believe it is responsible to retain a certain level of risk yourself in order to mitigate your insurance costs, which of course are also a loss.  

So if the detached garage is substantial and it is nicely finished, you may consider insuring it.  I would go with an insured value of about $65 per square foot.  If it's a smaller and older garage, I may consider self insuring for that piece and like Rob said, many dwelling fire policies do include a limit of insurance for other structures which is a percentage of the primary dwelling coverage.  The problem with that is, you are insuring a business activity or liability, as defined by the IRS, on a personal lines policy.

Hope that helps.

Ivan

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