When it comes to sheds, many homeowners are curious about two key aspects: whether their sheds are covered by home insurance and if they are taxable. This blog post aims to clarify these points, providing homeowners with a better understanding of how their sheds fit into the broader landscape of homeownership.
Are Sheds Covered by Home Insurance?
Coverage Inclusions
In most cases, sheds and other outbuildings on your property are covered by your standard home insurance policy. This coverage usually falls under the "other structures" section of your policy. "Other structures" typically include:
- Detached garages
- Fences
- Gazebos
- Pools
- Sheds
Insurance for these structures generally protects against a variety of risks, such as fire, theft, vandalism, and certain weather-related damages. It's important to note that coverage limits for "other structures" are often a percentage of your dwelling coverage, usually around 10%. For example, if your home is insured for $300,000, your shed and other structures might be covered for up to $30,000.
Customization and Additional Coverage
If you have a high-value shed or use it for specific purposes, such as a home office or workshop, you might want to consider additional coverage. Standard policies might not cover expensive equipment or modifications within the shed. In such cases, you can:
- Increase your "other structures" coverage limit: This involves adjusting the percentage or adding an endorsement to your policy.
- Schedule personal property: If you have valuable items in your shed, scheduling them separately can ensure they're covered adequately.
Exclusions and Limitations
Be aware of the exclusions and limitations in your policy. Common exclusions might include:
- Flood damage: Typically requires separate flood insurance.
- Wear and tear: Damage due to regular use or aging might not be covered.
- Business activities: If you run a business from your shed, standard home insurance might not cover related equipment or liabilities.
Are Sheds Taxable?
Property Taxes
In terms of property taxes, sheds can indeed be taxable. Whether or not your shed increases your property tax depends on several factors:
- Permanence: A permanent structure (e.g., one with a concrete foundation) is more likely to be assessed than a temporary one.
- Size and Function: Larger sheds or those with utilities (electricity, plumbing) are more likely to be taxed.
- Local Regulations: Property tax laws vary by locality. Some jurisdictions might not consider small, portable sheds in their assessments, while others might include any significant outbuilding.
Sales Tax
When purchasing a shed, sales tax is generally applicable. The amount of sales tax will depend on the state and local sales tax rates where the shed is purchased.
Personal Property Tax
In some areas, you might also encounter personal property tax on sheds, especially if they're used for business purposes. Check with your local tax authority to understand how personal property tax might apply to your shed.
Conclusion
In summary, sheds are typically covered by home insurance under the "other structures" section of your policy, but the extent of the coverage can vary. It's crucial to review your policy and consider additional coverage if needed. Regarding taxes, sheds can impact your property taxes depending on their permanence, size, and local regulations, and sales tax will likely apply to their purchase.
Understanding these aspects can help you make informed decisions about purchasing, insuring, and maintaining your shed. For personalized advice, always consult with your insurance agent and local tax assessor to ensure you have the most accurate and applicable information for your situation.
View our range of sheds here or you can always reach out our customer service for any question.
