What the #*&@%! is a she-shed?

Pardon the provocative preamble to this post. If you’ve seen the television commercial, then you know the scenario I am about to discuss. Upset couple watching the so-called “she shed” burn to the ground while they are on the phone with their insurance agent. Is the posh “she shed” covered? Is there enough coverage to replace it as the homeowner is led to believe?

In standard first-party insurance language the sizzling “she shed” in the commercial is an “Other Structure” under Coverage B. Coverage B helps pay to repair or replace outbuildings for personal use, other than the home on the residence premises, if they are damaged by a covered cause of loss. Any personal property inside the structure would be included as contents under Coverage C.

Homeowner’s policies generally define other structures as those separated from the dwelling by a clear space or connected to the dwelling by a fence, utility line, or other related connection. Clear space refers to an open area. Examples of structures that are typically covered under Coverage B for the same losses as the home include fences, detached garages, patios, in-ground swimming pools, gazebos, retaining walls, tool sheds, sidewalks, or driveways. Courts have also held that water tanks and irrigation systems may be covered as other structures.

Other structures on the property are normally covered for the same perils as the home. So, if dwelling coverage includes risks for fire, theft, falling objects and vandalism, then your damaged structure would likely be covered for those perils. For instance, if a tree falls on a detached garage on the insured property—or if your she shed is struck by lightning—other structures coverage may help pay for repairs.

Detached buildings can be covered at replacement cost value, but other structures that are not buildings are covered at actual cash value basis.

Will the property owners in the television commercial get a chichier new she shed? That depends on whether the structure was insured properly. The limit of insurance for all other structures combined is often automatically calculated as a percentage of the main dwelling, usually 10 percent of the dwelling limit under Coverage A. Because this coverage is a set percentage automatically included in the policy it may not necessarily be enough to repair or rebuild the detached structure on the property.

Readers are encouraged to review their homeowner’s policies and consider the other structures on your properties. If you have questions about your coverage, you should discuss with your insurance agent or coverage counsel before a loss happens.

If you want to know specifically what a she shed is, don’t ask me!

  • David Thompson, CPCU

    As stated in the blog, it’s critical for policyholders to read their policy BEFORE the claim takes place. While many policies do provide ten percent of the building limit for “Coverage B,” many insurers default that limit to two percent. Some insurers allow the complete removal of Coverage B. Additionally, structures that are rented to others or held for rental (Home sharing services like Airbnb are examples) are not covered. Nor are structures used for business or at times even used to store business personal property. I’d never recommend that Coverage B be reduced or removed; in fact, many times more coverage is needed.

    Some policies don’t cover other structures for some perils, mainly hurricane.

    Mot times the policy can be endorsed to fix these gaps. That’s why it’s critical that policyholders read their policy. Don’t buy based only on price; all insurance is not the same. Spend time with an agent and always say, “I was a quote for the best coverage available.” Start with the best then make a decision based partly on what you can afford. In 32+ years in the industry I’ve see it too often: “Expensive” before the loss is “cheap” after the loss.

    • Verne

      Thanks for your comments and industry insight. Very informative David.

  • Jim Johnson

    Particularly in coastal Florida and possibly in other hurricane prone states the insurers have exclusions on detached structures and fences damaged by wind. It is best to review your policy with your agent or other knowledgeable person to make sure you have coverage well before the event of a storm.

    • Verne

      Thanks for your great feedback Jim.

  • Bill Wilson

    Another point to consider is that Coverage B only applies to Other Structures ON the “residence premises.” I live on a lake and have a $30K+ covered dock and lift. I’m also on a bluff and have two flights of steel stairs going down to the dock. All of these structures are on Army Corps of Engineers property, not my premises. If my declarations page shows my “residence premises” as my street address, which is usually the case, I have no coverage on my homeowners policy for damage to these structures. ISO has two premium-bearing endorsements to cover structures off the “residence premises” though some insurers will simply allow a Declarations page entry to define those structures as part of the “residence premises.” If you buy insurance directly or online without the counsel of a good agent, are you likely to properly insure this property? I doubt it.

  • Verne

    Bill, thanks for sharing this is really good information that every homeowner should know.

  • Anthony

    I don’t believe you ever answered the question…. Will the home owners in the commercial get their shed replaced (assuming their is enough money under coverage B)?

    You state “Detached buildings can be covered at replacement cost value, but other structures that are not buildings are covered at actual cash value basis.”

    The “She Shed” is ‘other structures’, covered under an actual cash basis- therefore the ins co is likely not paying for a new she shed, same like kind and quality.

    A misleading commercial at best.