Nice new shed, do I tell the homeowners insurance?

Question

We built a really nice shed (building permit too). Is it covered under my homeowners automatically or do I have to send them pictures or something?

Bonus question: what about the contents of the shed which belong to my tenants?

Answer 1

You need to tell the insurance company so they can add it to your policy as other structures.  As far as the contents which belong to someone else, they need to get renters insurance for their property.  You can't insure their property because you can't insure what you don't own.

Answer 2

Tenant's posessions are NOT covered under your homeowners policy.

The shed, if it's detached, is "other structure".  Your homeowners policy, if it's a standard policy, has 10% of the dwelling limit for "other structures" limit.  That means all other structures, combined.

So, look at your policy.  Do all your other structures, including this shed, exceed the "other structures" limit?  If so, you'll need to increase that amount.  If not, you don't.  

BUT, if you make MONEY off of this shed, ie, you rent it out to others for storage, it could quite possibly not be covered at all.  It's going to depend on the setup.

You really need to sit down and discuss this with your agent - and ask them to confirm the results IN WRITING to you, just in case.

Answer 3

Most home owners insurance policies automatically cover other structures, but let the company know it is there to be safe. Your premiums shouldn't rise. My question is does the insurance company know it is a rental? That may cause a rise due to the increased risk. The contents that belong to the renters will not be covered. It is not due to the fact you don't own them, it is because you have no insurable interest in them and will not suffer a loss if they are destroyed. ( Technically if you have a mortgage, you don't own the house, but you can insure it to protect your interest and that you would suffer the loss.) If you don't tell the insurance company you also run the risk of something related to the shed causes damage to the house and failure to notify them may be an excuse to deny the claim.  ie; If a "tenant" puts in something that explodes and the fire spreads to the main house you don't want to have to fight over the payment.