What Does Coverage B Cover on a Homeowners Policy?
It pays to repair or rebuild detached structures on your property, like a garage, shed, or fence, not the house itself.
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Coverage B is set as a percentage of your Coverage A, the amount it would cost to rebuild your house. Your declarations page shows the exact figure and the dollar amount it works out to. Before closing, walk your lot and count what's actually there. A detached garage, a shed, a fence, a freestanding deck all fall under this coverage, not the main house. If that dollar amount looks low for what you have, ask about raising it before you're locked into the policy.
Worth checking before you sign
Policies set Coverage B as a slice of your dwelling amount, not what's actually on your lot. Comparing quotes shows whether another policy gives your garage, shed, or fence a number that fits.
What counts as a detached structure, exactly
A detached structure is anything on your lot that isn't attached to the house by a wall or a roofline. A garage that shares a wall with the kitchen is part of the dwelling, under Coverage A. The same garage standing a few feet away, connected only by a walkway, falls under Coverage B. The line is physical connection, not distance or purpose.
Buyers tend to undercount what this actually includes. A fence around the yard, a shed holding a mower, a detached carport, a gazebo, a freestanding deck, even a driveway or a paved walkway on some policies. Mailboxes, lampposts, and in-ground pools sometimes fall here too, though pools are often handled separately or excluded, so the declarations page is worth reading closely rather than assumed. If the house came with a workshop or a guest structure nobody lives in, that's Coverage B as well, and a structure like that can use up a meaningful share of the limit on its own.
There's an exception worth knowing before closing. Structures used for business don't typically qualify the same way. A shed that stores lawn equipment is covered. The same shed rented out as a studio or used to run a side business from may not be, depending on the policy. If anything on the lot earns income or has tenants, like a detached guest house someone rents out, that usually needs to be flagged to the insurer directly, since it can change how the whole structure is treated.
None of this changes what Coverage B pays out. It still rebuilds what's detached, not the house, and the limit is still a percentage of Coverage A. What changes is how carefully the lot needs to be counted. A buyer who only thinks of the garage and misses the fence, the shed, and the deck may find the number was never set high enough to begin with, and that's easier to catch before the binder is issued than after something happens to one of them.
What happens if Coverage B runs out after a claim
Coverage B has its own limit, separate from the house. If a storm takes out the fence, the shed, and the detached garage in the same event, all three draw from that same pool of money. Rebuilding the garage alone could use most of it, and whatever is left has to stretch to cover the fence and shed too. There's no separate bucket for each structure on the lot.
How much of that limit a claim actually pays also depends on how the policy values the loss. Some policies pay replacement cost, what it takes to rebuild the structure new. Others pay actual cash value, which is replacement cost minus depreciation for age and wear. A ten-year-old wood fence valued at actual cash value might pay out far less than what a new fence costs to install. The declarations page or the policy wording says which method applies, and it's worth asking directly if it isn't clear.
The deductible applies here too, and it's usually the same one that applies to the house. Whatever that dollar amount is, it comes out of the claim before Coverage B pays anything, even on a small structure like a shed. On a minor loss, that can mean the payout is small or the claim isn't worth filing at all. This is part of why the limit matters more than it first seems. A number that looked fine on paper can turn out to be tight once a deductible and a valuation method are both working against it.
None of this shows up by just reading the dollar figure on the declarations page. Two questions are worth asking before signing. How are claims on detached structures valued, and could one large loss leave the rest of the lot underinsured for the rest of the policy term. A lender wants proof of coverage by closing, not proof that the coverage fits the property. That part falls to the buyer to check before signing rather than after a claim shows the gap.
Before you sign the binder
Check the Coverage B dollar amount against what's actually on the lot, and ask whether claims are paid at replacement cost or actual cash value. Both take a minute to confirm and are harder to fix after closing.
