We’re lucky to have a few useful sheds in our backyard, so are they covered in our homeowner’s insurance or should we insure them separately?
Your homeowner’s insurance policy will usually cover your shed, as it’s considered to be an ‘other structure’ by your insurance firm. Most policies give up to 10% protection of your total policy limit, which means if your home is worth $500,000 you may receive up to $50,000 for damage to your shed.
Let’s look at the topic of insuring garden sheds in greater depth, and consider what you need to look out for in the detail of your homeowner’s policy…
Should You Insure a Shed Separately? (Or Is it Covered On Your Main Household Policy?)
Many homeowners are unaware that a standard home insurance policy covers outbuildings and structures such as detached garages, gazebos, fences and guest houses. Most main household policies have “other structures coverage” (also known as Coverage B).
A main household policy protects these structures from damage that occurs from weather events or accidents like another person’s vehicle crashing into the structures or a major water leak. Policies normally protect these structures from falling objects — such as a falling tree (if the homeowner properly maintained the property and the tree before the incident occurred).
Sheds are no different. Your homeowner’s policy covers your shed from the same damage as we outlined above. In most cases, home insurance covers your shed and other structures at 10 percent of the total policy amount of your main structure coverage.
For example, if your main policy coverage is $500,000, you’ll have roughly $50,000 worth of protection for your shed and other outbuilding structures. Please review the Coverage B section of your policy to find out how much coverage you have.
If you feel 10 percent of your total policy isn’t enough to cover your shed, you can buy more coverage. However, insurance companies restrict how much additional protection you can purchase for outbuildings and structures. So, it’s critical to contact your agent to learn how much more coverage you’re allowed to buy.
Do the Contents of My Shed Need to be Insured Separately?
For many homeowners, the value of the contents in their sheds adds up to thousands of dollars. Unfortunately, many people overlook whether these valuables are covered by standard homeowner’s insurance policies in the event of a disaster.
Some people use their sheds as home spas complete with hot tubs and gym equipment worth tens of thousands of dollars. Other homeowners might have thousands tied up in yard tools and equipment. Either way, it pays to know if a standard policy covers the contents.
Fortunately, most policies have personal policy coverage that protects most of the content in your shed. For example, if you have a lawnmower and gardening tools in your shed, personal policy coverage will help pay to repair or replace them if they’re damaged.
However, you’ll only receive compensation up to your personal policy coverage limit — which is typically 50 percent of your main dwelling policy limit. Keep in mind your insurance company only pays the actual cash value of your contents. Insurance companies factor in depreciation from the time of purchase when calculating how much you’ll be reimbursed.
Some insurance companies let you buy more coverage for your personal property. You can buy more protection at the replacement cost value of your contents — which reimburses you for the actual value you paid for an item at the time of purchase, or the full repair costs of an item.
But, additional coverage increases the premium you’ll pay every month or every year. So, the bottom line is it’s up to you if you want to buy more coverage to protect the contents of your shed, but it’s not a requirement.
What Does My Insurance Policy Cover My Shed For?
As we discussed earlier, a homeowner’s insurance policy typically protects your shed at 10 percent of the main dwellings policy limit. Therefore, a $200,000 home policy limit would cover roughly $20,000 in damages to your shed or other structures.
Keep in mind the policy doesn’t cover 10 percent for each structure. For example, if you suffer $20,000 in weather damage to your shed and $20,000 in weather damage to your detached garage, and your main dwelling policy limit is $200,000, you’ll only receive $20,000 in reimbursement for both detached structures.
You’ll have to pay the other $20,000 in damages out-of-pocket — unless you bought more coverage for your detached buildings and their contents.
What Doesn’t My Insurance Policy Cover My Shed For?
Although your shed does have some coverage from your main home insurance policy, there are exclusions that don’t cover your shed or its contents. Here are some examples:
- Damage from floods or freezing conditions
- Earth movements or earthquakes
- Pest infestations
- Wood rot or mold
- Maintenance problems (standard wear and tear)
- Sewer backup or sinkholes
- Damage from pets or birds
Additionally, insurance companies limit coverage on any high-value items you store in your shed. Examples include:
- Currencies, rare coins or fine art
- Precious metals
Additionally, standard policies don’t provide coverage if you store items in your shed related to running a business. Using the lawnmower and yard tools example above, if you use those items for a yard care or landscaping business, a standard home insurance policy won’t cover them if they’re damaged while they’re on your property. You’ll need to use business insurance to cover any damage to those items.
Should I Make Sure the Shed I Buy Has a Warranty?
If your house or garage is bursting open with personal items because of a lack of space — and you want to store them in a shed built by a contractor — you should have a warranty in place to cover any construction defects.
A prebuilt shed provides a sturdy, organized and sensible space for your extra items, but they could be at risk if the roof starts leaking or high winds rips it apart because of shoddy construction.
A good warranty covers any defects from poor workmanship. Additionally, companies offering a warranty show they’ll stand behind their work and not cut corners to save a few dollars.
However, if you’re storing a few odds and ends using a metal shed you bought from your local hardware store, you’re probably okay with the standard manufacturer’s warranty.
If you’re buying an expensive multifunctional prebuilt wooden shed from a major retailer to store high-end items, you’ll want to make sure you have a full-coverage warranty.
Summary: Why It’s Important to Build Your Shed Properly on a Solid Foundation
To limit insurance claims, any structure you build must start with a solid foundation – and your shed is no different.
A strong foundation provides support to your shed’s walls, which support the shed’s roof. The primary purpose of a shed is to protect your possessions from the elements, and that protection starts with your roof.
Luckily, several types of foundations are available. However, choose a foundation based on your shed’s size, its planned function and where you live. Common foundations include:
- Crushed rock or gravel
- Concrete slabs
- Poured footers
- Concrete pavers
You want to avoid placing your shed directly on the ground. First, moisture from the ground will seep through and rot metal components or cause wood corrosion. Additionally, most yards are uneven, which can make it difficult to open and close windows and doors properly.
And, uneven ground affects any structure’s stability, which leads to faster wear and tear and a shorter lifespan. Placing a shed on an even, stable foundation keeps it structurally sound, promotes proper water drainage, allows windows and doors to open and close properly and minimizes the transfer of moisture.
Finally, find out if your community has any restrictions on the size or style of shed you can erect on your property, the type of foundation you can use and where it’s built. If your property is part of a homeowner’s association, find out if it has specific restrictions or requirements.
Homeowner and property investor Larry James founded Take a Yard in 2020 to bring you the very best outdoor living content, based on his years of experience managing outside spaces. Read more >