The other day I saw a cartoon that pictured two men talking – one had a cast on his leg and his head wrapped in bandages; the other was an insurance agent who was saying, “I’m sorry, but your policy doesn’t cover ‘grabbing the bull by the horns’.” While the cartoon made me chuckle, it also reminded me it’s often after-the-fact when we actually learn how our coverages are structured. Take, for instance, your homeowners’ policy. A homeowner should always evaluate his/her policy to ensure coverage for not only the dwelling but any other structure(s) on the property. In order to make sure you have the proper coverage, it is important to understand how the insurance industry defines these two key terms.
Dwelling Coverage: This is the section of your homeowners’ policy that covers your home in the event it is damaged or lost. Simply stated, it covers anything that shares the same foundation as your house – an attached garage, fixtures in the house, electrical wiring. You want to be sure to purchase enough insurance to cover the cost to rebuild your home in today’s market
Other Structures: This is the section of your homeowner’s policy that covers all the other structures on your property that do not share a foundation with your house – detached garages, sheds, pools, cabanas, bathhouses, fences.
It is important to note here that coverage of “other structures” is typically 10% of your dwelling coverage. So, if you have your home covered for $150,000 and a detached garage that would cost $20,000 to replace, you may want to talk to your agent about your options.
It is also important to note that coverage of “other structures” does not cover those structures if they are used for business purposes. For example, you have a detached garage where you make and sell wooden Christmas ornaments – if that structure burns down, it is not covered.
So, before we have any coverage surprises of our own, maybe we should all “grab the bull by the horns” and talk to our agents to ensure we are properly insured. After all, those insurance cartoons may make us smile, but they’re really only funny on the comic pages!