Your homeowners policy consists of many parts. Coverage A is for your dwelling, C is for contents, D pays if you’ve lost the use of your home, and there is a whole section on liability, too. This article deals specifically with Coverage B – Other Structures.
Please, pull your policy right now and look at what your limit is. The limit needs to be at least the amount needed to rebuild the structures in your backyard. So whether it is a detached garage, a shed, a fence, or even a pergola, your other structures limit needs to be high enough to hire a contractor and put an all new structures in that place. The reason it deserves some added attention right now is because costs are pretty high for construction!
If the cost to reconstruct is more than your limit, the company will not give more! That means if you only have $20,000 on your two-car detached garage, you are likely at least $15,000 short (probably more). They stop paying at the limit shown and you either need to take care of the rest or build a smaller garage…
If you do notice that your limit might be a little low, there is good news! It is VERY simple to increase it and it is very affordable (usually only a couple of dollars per year for each thousand of additional coverage needed). Even if your building is in less-than-perfect condition, remember that the company is going to rebuild the space so insure it like it is new (because it will be new if a covered peril destroys it).
Because this is such a common coverage deficiency right now, it is strongly recommended that you take a moment and understand your setup. If you need help choosing the right limit and even reviewing the rest of your policies, please reach out to your agent. We always have your best interest in mind and will work to respect your budget, your time, and your valuable property.