A Guide to Structures Coverage (Coverage B) in Homeowners Insurance

Homeowners insurance pays to repair or replace your property after an accident or a natural disaster. The amount of coverage available depends on which type of insurance you have, but even the most basic policies include some protection for the structure of your home. Homeowners insurance also includes coverage for other structures, which falls under coverage B. Learn more about this type of coverage to understand why you need it.

What Is Coverage B?

Coverage B, also known as structures coverage, applies to the detached structures on your property. To qualify as detached, a structure must be “incidental” to the use of your home [1]. For example, if you have a shed for storing tools, it’s completely separate from the principal structure on your property. Therefore, it qualifies as a detached structure. Steve Glass, a homeowners claim manager, adds, “A structure that’s not attached to the dwelling qualifies as an other structure if it’s permanently attached to or otherwise forms a part of the realty.”

How Does Structures Coverage Work?

Coverage B pays to repair or replace detached structures if a covered peril damages them. In the insurance industry, a covered peril is an event that’s covered by your insurance policy.

To be covered, the damage must be accidental. Insurance companies generally don’t pay for damage caused by intentional acts, normal wear and tear, or poor maintenance. For example, if you don’t repair your detached patio after noticing that it has some rotted wood planks, your insurer may not cover any damage to the patio.

It’s also important to understand whether you have a named-perils policy or an open-perils policy. A named-perils policy only covers specific events [2]. These events are listed in your policy documents. In contrast, an open-perils policy covers all events that aren’t specifically excluded. This is also known as all-risk coverage.

Coverage B Limits

Insurers usually calculate your coverage B limit as a percentage of your coverage A limit. Coverage A, also known as dwelling coverage, is the main component of a homeowners insurance policy. It covers the structure of your home, along with attached fixtures, central air-conditioning systems, plumbing systems, and electrical systems.

If you have $200,000 worth of coverage A, your insurer might calculate your coverage B limit as 10% of that figure. Therefore, you’d have $20,000 in structures coverage.

What Is and Isn’t Covered?

Coverage B applies to a wide range of detached structures:

• Pavilions
• Gazebos
• Storage sheds
• Pole barns
• Detached patios
• Fences
• Carports
• Outdoor kitchens
• Guest houses
• Detached garages

If you have an in-ground swimming pool, check your insurance policy to determine if it’s covered by your structures coverage or your dwelling coverage (coverage A).

Factors Affecting Your Premium

As of February 2024, homeowners insurance costs an average of $1,759 per year for $250,000 worth of dwelling coverage [3]. In some states, it costs much more. For example, homeowners in Nebraska pay an average of $4,745 per year. Many factors affect the cost of homeowners insurance. These are a few of the most important.

Location

Your location affects your premium in two ways. First, different areas of the country have different costs of living. For example, the cost of living in California is 49.9% higher than the national average [4]. The cost of living in your area has a big impact on the cost of repairing or replacing a damaged structure. It could cost much more to buy materials or pay contractors in an area with high costs of living.

Second, some homes are much closer to fire stations than others. If you live near a fire station, you have a better chance of getting help quickly if your home catches on fire. Therefore, your insurer may charge you less than it would charge a consumer who lives 10 or 20 miles from the nearest fire station.

Credit History

Your insurance company may check your credit report before issuing a policy. Insurers use the information in your report to determine if you’re likely to file a claim. If an insurance company decides to insure you, they typically set your premium based on your payment history, the length of your credit history, and the number of inquiries you have on your report [5].

Insurers also use public records to determine if you have any tax liens, bankruptcies, or judgments against you. If you have any concerning information on your credit report, your premium is likely to be higher than the premium for a consumer with excellent credit.

Claims History

The Comprehensive Loss Underwriting Exchange maintains information about your auto and home insurance claims [6]. Your insurance company may pull your CLUE report and use the information to determine your premium. Generally, people with multiple claims on record pay more than people who’ve never filed a home or auto insurance claim.

Scope of Coverage

The scope of your insurance policy has a big impact on your premium. If you live in a single-family home, you have four main coverage options: HO-1 insurance, HO-2 insurance, HO-3 insurance, and HO-5 insurance.

An HO-1 policy (basic form policy) is the most basic type of homeowners insurance policy available. It covers your dwelling, but it doesn’t provide any protection for the contents of your home. Additionally, it only covers named perils. Because it offers such a limited amount of protection, HO-1 insurance is the least expensive of the four options.

HO-2 insurance (broad form policy) provides a little more protection than HO-1 insurance. For example, an HO-2 policy covers damage caused by falling objects and plumbing issues. HO-2 insurance also covers the contents of your home. However, it only covers named perils.

HO-3 insurance (special form) is the most popular option, as it provides better coverage than an HO-1 or HO-2 policy [7]. If you have an HO-3 policy, you have dwelling coverage for all perils except the ones specifically excluded by your insurer. Like HO-1 and HO-2 insurance, HO-3 only protects the contents of your home against named perils. If you want the contents of your home covered at their full replacement cost instead of their actual cash value, you may need to purchase an endorsement.

HO-5 is the most comprehensive type of insurance for a single-family home. It provides open-perils coverage for your dwelling and its contents, giving you the greatest amount of protection against unexpected losses [8].

Deductible

When you purchase homeowners insurance, you have to choose a deductible, which is the amount of money you have to pay out of pocket before your insurance company covers your losses. For example, if you have a $10,000 claim and a $2,000 deductible, you have to pay for the first $2,000 in repairs. If your claim is approved, your insurer will pay the remaining $8,000.

If you choose a high deductible, you have “more skin in the game,” so your insurance company may charge you less for your policy.

Coverage Limits

Your coverage limit is the maximum amount your insurance company will pay for an approved claim. The higher your limit, the more risk your insurance company is taking on. Therefore, insurers typically charge more for policies with high coverage limits.

Age of Your Home

The older your home is, the more likely it is that something will go wrong. Additionally, your home may have features that would be difficult to recreate with today’s building supplies and techniques. Your insurer may account for these factors by charging you more for homeowners insurance.

Available Discounts

Many insurance companies offer discounts to attract and retain valuable customers. If you qualify for one of these discounts, you may pay less for homeowners insurance than a customer who has to pay the standard rate. These are some of the most common discounts available:

• Military discount
• Bundle discount (combining homeowners insurance with another type of insurance from the same company)
• Paid-in-full discount (paying all at once rather than making monthly or quarterly payments)
• Claims-free discount
• Loyalty discount

Protecting Detached Structures

If you have any detached structures on your property, make sure you have adequate insurance coverage. Even if you have a healthy savings account, it may not be enough to repair or replace a structure that sustains severe damage due to a covered peril.

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Reviewed by Steve Glass

Steve Glass is a retired insurance professional with over 34 years of experience in the property and casualty insurance industry. Over the course of his career, Steve led teams that handled property and casualty claims, auto medical claims, auto bodily injury claims, catastrophe claims and insurance subrogation recovery efforts. He also has experience as an Insurance Subrogation Arbitrator.