Whether you build a traditional home or a barndominium, you want to make sure that it is insured in case of fire, tornado, mudslide, etc. You want to make sure that if anything happened, you would get reimbursed if it is damaged or destroyed.
Everyone knows that a traditional home is insurable but are barndominiums insurable? The answer is yes, they are insurable but do you need a special type of policy? One thing to note is that there are different types of barndominium insurance.
This article will help you decide what type of barndominium insurance you will need and what all it covers. When you finish this article, you will all the information at your fingertips to decide how to insure your new barndominium.
Are Barndominiums Insurable?
The simple answer is yes, barndominiums are insurable. Although it is less expensive to build a barndominium than a traditional home, you still want to protect your investment and personal content. When you look for insurance for your barndominium, a regular home insurance policy might not cover it. You might need to shop for a certain type of insurance.
The reason you might have to have specific insurance coverage will depend on how you are going to utilize your barndominium. Barndominiums are commonly used as residences or family homes. Some build barndominiums with a dual purpose. In addition to a residence, they might also be used for storage of vehicles, agricultural workspace, or workshops.
If this is the case, then you would need a different type of insurance and not just regular home insurance. Most insurance companies will offer you insurance for your barndominium but there are some reasons they might not.
Why an insurance company might not insure a barndominium
Some insurance companies just will not insure a barndominium. The reasons vary. It may be that they do not cover converted structures or structures with a dual purpose. Another reason that an insurance carrier might not cover your barndominium is simply that it has a metal roof and they do not cover buildings with that type of roof.
It could also be the kind of siding that is on your barndominium They may offer pole barn insurance as long as your barndominium does not use a metal roof or that particular type of siding. The reason that an insurance company might offer that type of policy has to do with hail.
What Does the Insurance Cover?
Exactly what your barndominium insurance will cover will depend on the type of policy you took out. In general, it usually covers the following costs:
- To repair the damage to your barndominium itself
- Of what you would incur renting someplace while your barndominium is being repaired but there may be a limit of how much is covered.
- To replace or repair certain possessions that you store in your barndominium
- To treat any injuries that are related to structural damage for any guests that are visiting your barndominium property.
- To rebuild or repair the exterior or interior due to vandalism, or electrical failure
Barndominium insurance is similar to home insurance in that it does not cover everything. It may protect the barndominium in case of tornados, hurricanes, fire, electrical problems, and other hazards but usually will not cover damage from earthquakes or floods. To cover these, you may need an additional policy but it depends on where you live and your insurance carrier.
Many times if you fail to maintain your barndominium and something happens, your claim may be rejected because it was your responsibility to maintain your barndominium. If your policy has a liability, it will generally cover your clothing, appliances, and furniture.
It may also cover your pets. For example, if your dog would bite someone inside or outside your home, your policy will cover their medical expenses.
Types of Barndominium Insurance
Barndominium insurance falls into three main categories.
Actual cash value
This is generally the type of insurance policy that most will choose for their barndominium. If there is damage to your possessions or barndominium, this coverage will pay you based on how much the possessions or barndominium are worth, accounting for depreciation.
One thing to note is that with this type of coverage, it only offsets the lost value of your property and building. It does not offset the cost of making repairs. This type of insurance is cost-effective but not the most comprehensive.
This might appear to be almost the same as actual cash value at first glance and does cover your possessions and barndominium. The difference is that this insurance policy is that depreciation is not taken into account when determining what you will receive.
If you want your policy to cover the cost to repair your barndominium also, then you will want to have this type of coverage. Even if the damage is severe and you have to rebuild part or all of the barndominium, this is the coverage that will help pay for this. This would also be the type of insurance you should choose if you are going to be in the home for a long period of time.
What Determines Insurance Rate?
As with all insurance policies, there are things that determine what your rate will be. The one main thing that will determine your rate is the more comprehensive your policy is, the more expensive it will be. There are also other factors.
- Relationship with the insurance company—if you have an established relationship your rates could be lower. There are some companies that will offer a discount if you bundle all of your insurance together, like car and barndominium insurance.
- Distribution of space and usage—if you have a dual barndominium, then the insurance company will look at the distribution of the space. They will look at how much is used for the residential part and how much is used for the other purpose. For example, if most of your barndominium is used for storing hazardous equipment, then your rates will be higher.
- Your credit score—if you have a high credit score, your rates might be lower but if you have a bad credit score, they could be higher.
- Barndominium history, condition, structure, and material—an insurance company will look at your barndominium before insuring it to see the state of it. They will want to know how old it is, including if some parts are new and some are the original parts of the structure. There may also be features of the barndominium that could affect your premium, such as the type of materials. What other features might be will depend on the insurance company.
- If you have filed claims in the past—if you are applying at a new insurance company they will want to know if you have filed claims on this property before and if yes, how many. If you have filed several claims, the insurance company may be leery of issuing you a policy without you paying a higher premium. Also, if you file a lot of claims, your premium could go up.
- Location—where you live could have an impact on your premiums and what you qualify for. For example, it may be cheaper to insure your barndominium in one neighborhood than in another one. Geographical features, such as if you build on a flood plain, you may have to pay more than you would if you built it where the structure would not be compromised.
- Deductible—one way to have a lower insurance premium is to have a higher deductible. The drawback with a higher deductible though is that it may reduce your benefits.
- Safety and security systems—just by setting up a functional security system, you could reduce your monthly rates. If you have smoke alarms, deadbolt locks, carbon monoxide detectors, etc, it can also help to reduce your monthly rates.
Other reasons can include the number of plumbing and electrical fixtures and if the property is used for a home business. An insurance company may also take into consideration the proximity of other structures to the barndominium.
Are barndominiums insurable? After reading this article, you can see that they are. This article has also covered what an insurance policy might cover, the types of insurance you can get, and how you can lower your monthly payments. Reading this article will help you decide what type of barndominium insurance you need.