Financing
Does homeowners insurance cover a shed?
Usually, yes. Most standard homeowners policies include "other structures" coverage (often called Coverage B) for buildings on your property that aren't attached to the house, such as storage sheds, detached garages, and fences. The Texas Department of Insurance lists storage sheds by name as an example.
The catches are in the details. That coverage is often capped at a share of your home's coverage, commonly around 10%. It may not apply if you run a business out of the shed. The stuff inside falls under your personal property coverage, and flood damage isn't covered by a regular homeowners policy.
Why it matters
A new shed, workshop, or studio can be a real investment, and in Texas the biggest threats to it are hail, high wind, and flash flooding. Before you find out the hard way what your policy says, it's worth a five-minute call to your agent once the building is delivered.
Two Texas-specific points are worth knowing. First, many Texas policies carry a separate wind and hail deductible, and it's often a percentage of your home's insured value instead of a flat dollar amount. TDI's own example shows a 5% deductible on a $150,000 home coming to $7,500, which is more than many shed repairs cost. Second, if you live in a coastal county, your homeowners policy may exclude wind and hail altogether, with that coverage coming from the Texas Windstorm Insurance Association (TWIA) instead.
Flood is the other gap. Homeowners policies generally don't cover flooding. Under the National Flood Insurance Program, a detached garage can get limited coverage through the home's flood policy, but other outbuildings like sheds generally need their own separate flood policy.
Real examples
Hail dents the roof and siding
This is usually covered under other structures coverage, but only the amount above your wind/hail deductible. If that deductible is a percentage of your home's value, a small shed repair might not reach it.
A backyard workshop you sell from
Standard policies commonly exclude structures used for business. If you make and sell products, meet clients, or run a side business from the building, ask your agent about a business endorsement or a separate policy.
Tools and equipment stolen from inside
Items inside the shed are usually handled under personal property coverage (Coverage C), not the shed's coverage. Keep receipts and photos of expensive tools, mowers, and equipment.
Common mistakes
- Assuming the default limit is enoughIf you already have a detached garage, a long fence, and now a large finished studio, they all share the same other structures limit. Add up what it would cost to replace all of them, and ask about raising the limit if you're short.
- Not knowing your wind/hail deductible in dollarsLook at your declarations page. If it shows a percentage, multiply it by your dwelling coverage so you know what a hail claim would actually cost you before the insurance pays anything.
- Counting on homeowners insurance for floodingFloodwater damage isn't covered by a standard homeowners policy, and NFIP coverage for a house generally doesn't extend to sheds. If your lot floods, pick a higher spot for the building and talk to your agent about separate flood coverage.
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