Warning about home owners insurance


I know a lot of people that have guest houses on their property or even very nice detached garages.  I want to throw out a warning of consideration.  Most home owners insurance policies void coverage for "other structures" when they are being held exclusively for rental or being used as a business.  This means if you or someone you are allowing to run a business out of another structure, like a guest  house or detached garage, your policy will not cover that other structure if it burns down or is otherwise damaged.  Likewise, if you are renting that structure out as a dwelling for others, your policy will not cover it.  Standard ISO home owners policies read, "We do not cover Other Structures rented or held for rental to any person not a tenant of the dwelling, unless used solely as a private garage."  It continues, "We do not cover, Other Structures from which any "business" is conducted." 

This is only one example of where an insured might be exposed.  Because their home insurance policy has coverage for "Other Structures" under Coverage B of their policy, they think the other structures are always covered.  This is simply not the case.

Also, remember that "Other Structures" are not covered as part of your dwelling A coverage.  Other structures have their own coverage and this is often a percentage value of your coverage A amount.  This is often not enough coverage for a guest house or nice detached garage.

If you would like a free review of your home insurance policy, Insurance Professionals of Arizona would be happy to do so.  Call us at 480-981-6338.  We can also provide you with a free quote to make sure you are getting the best price.

Disclaimer: We encourage all insured's to carefully read their home insurance policy.  Each carrier's policy is different.  The information provided in this article is intended for a general audience and meant to be used for informational purposes.  When determining what insurance you should purchase we recommend you speak with a highly qualified and reputable insurance agent.