Can You Increase Other Structures Coverage Separately From the Dwelling?
A detached garage, a workshop, or a guest cottage in the backyard is usually covered by a homeowners policy automatically, but the amount set aside for it is often decided by a formula rather than an actual look at what it’s worth.
The short answer
Other structures coverage can generally be increased separately from the dwelling limit, either by raising the percentage allocated to it or by adding a specific endorsement for a structure that exceeds what the standard formula provides. Most policies set this coverage automatically as a percentage of the dwelling coverage amount, commonly in the range of 10 percent, which works fine for an ordinary shed but can fall short for a larger or more valuable detached structure. Adjusting it usually just requires a conversation with the insurer and, sometimes, updated documentation of the structure’s value.
How the default limit is usually calculated
In a typical homeowners policy, other structures coverage isn’t purchased on its own — it’s calculated automatically as a set percentage of whatever the dwelling is insured for. That means the amount available to rebuild a detached garage isn’t based on what the garage actually costs to rebuild, but on a fraction of an unrelated number. For a modest shed, that default percentage is often more than enough. For a larger detached garage, a converted barn, or a structure with finished living space, the automatic percentage can land well below actual rebuild cost.
When the default formula falls short
The gap shows up most clearly when a detached structure has been upgraded or was never a simple utility building to begin with — a garage with a finished workshop, electrical and plumbing work, or a guest unit used as rental space. In those cases, the automatic percentage-based limit may not reflect the structure’s real rebuild cost, especially once labor and materials pricing is factored in. It’s also worth noting that other structures coverage generally excludes structures used for business purposes unless a separate endorsement addresses that use specifically.
How the increase is typically handled
Raising this coverage independently of the dwelling usually happens one of two ways. An insurer can simply increase the percentage or set a specific higher dollar limit for other structures as part of the existing policy, which is the more common route for a structure that’s just modestly undervalued. For a structure with unusual value or use, a separate scheduled endorsement may be used instead, similar in concept to how a rider or endorsement adds targeted coverage elsewhere in a policy. Either approach generally requires providing enough detail about the structure — size, construction, any finished interior — for the insurer to price the added coverage accurately.
Deciding whether to increase it
The main question is whether the automatic percentage genuinely reflects what it would cost to rebuild the structure today, not what it cost to build originally or what it’s worth on paper. A rough construction-cost estimate for the specific structure, compared against the current other-structures limit, is usually enough to reveal whether there’s a meaningful gap. It’s worth revisiting this periodically, since renovations, additions, or years of rising construction costs can widen the gap without anyone noticing until a claim is filed.
What to weigh
Because other structures coverage rides along with the dwelling limit by default, it’s easy to assume it scales appropriately without ever checking. Comparing the current limit against a realistic rebuild estimate for each detached structure on the property is the most direct way to know whether the default is enough or whether it’s worth increasing separately.