Does Home Insurance Cover Detached Garages and Sheds?

 

Does Home Insurance Cover Detached Garages and Sheds?


Yes — the HO-2, HO-3, and HO-5 homeowners forms all cover your detached garage, shed, fence, or gazebo automatically under Other Structures Coverage (Coverage B), at no extra premium. The catch: it's capped at 10% of your Coverage A (dwelling) limit, shared across every structure on the property.

What Coverage B Pays For

It follows the same named perils as your dwelling — fire, windstorm, hail, vandalism, theft — but excludes flood and earthquake.

Dwelling limitOther Structures limit (10%)
$250,000$25,000
$400,000$40,000

That number is shared: a garage, shed, and fence on one property draw from it together, not from separate pots. Tools stored inside count as personal property coverage, not Coverage B. Some carriers pay fences at actual cash value, not replacement cost — check your declarations page.


The Exclusion Most Homeowners Miss: Business Use

Business use isn't a partial cutback — it's total. Once a garage or shed stores business inventory or houses a paid workshop, Coverage B stops protecting it entirely, even against a simple fire. Agents often flag this with homeowners who quietly turned a garage into a workshop, assuming a partial payout still applied. A rented guest cottage has the same gap; it needs an endorsement such as HO 04 40 to restore it.

Example: One Fire, Two Coverage Limits

A homeowner with a $300,000 dwelling limit has a detached two-car garage catch fire from an electrical short, and the fire spreads to the house. That's two claims: the garage under Coverage B, capped at $30,000, and the house under Coverage A's full $300,000. A finished garage interior can exceed $30,000 fast, and whatever's left still has to cover any other structure damaged later in the same policy period.


Bottom line: find your Coverage B number, add up rebuild cost for every detached structure, and ask your agent about a scheduled endorsement if there's a gap — before a loss, not after.

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