If you’ve recently built — or are planning to build — a barndominium, you’re going to need someone to provide barndominium insurance. The question is, who? And for how much? And for what purposes?
Who issues barndominium insurance? Barndominium insurance is issued by most U.S. insurers — the same ones that provide coverage for single family homes. And there are various factors to consider when evaluating the right one for your barndo, including:
- What’s provided in the coverage
- Types of coverage
- What they cover
- What they don’t cover
So, when shopping for barndominium insurance, it’s essential to understand the types of policies available, what the policies cover, and how the rates for the policies are determined.
Dual role construction
You should recognize that barndos, which are typically made of prefabricated sheet metal frames, have dual roles — residential use and storage.
One side of the home may provide room for stuff — like boats, cars, and ATVs. And the rest of it has living space for people, with all the amenities of a traditional home. This includes a kitchen and bathroom. This dual construction can affect how much a policy costs.
For example, insurance agents consider various factors when determining the rates:
- The ratio of storage space to living space
- Whether the property is also used for business
- Number of electrical and plumbing fixtures
They also take into consideration the proximity of the building to other structures. The building’s proximity to other structures affects the safety and aesthetics of the structure.
What’s provided in the coverage
Standard barndominium insurance covers costs related to:
- Damage to the structure
- Contents in the structure
- Injuries caused as a result of damage to the structure
- Costs associated with a rental while repairs take place
Interior or exterior damage
Typically, coverage includes repairing or rebuilding a barndo that has been
- damaged by vandalism,
- electrical failure,
- fires, and other disasters.
However, the same policy probably doesn’t provide cover for damage caused by
- earthquakes and
- poor maintenance
So, keep your barndo well-maintained.
Some barndominium insurance policies also don’t cover freestanding structures separate from the main house. This includes garages and sheds. Be sure to ask about this.
Are my contents covered? And what about liability?
Here’s what your insurance usually covers:
It also covers homeowners and their families from lawsuits filed by third parties who incurred damages or injuries while in their homes.
Finally, you’ll be glad to know that barndominium insurance liability coverage also includes pets.
This means that if your dog bites a third party within or outside your home, the insurance policy will cover the medical expenses of the person bitten by your dog.
And that’s good news for Fido.
Renovations and repairs
Some barndominium insurance policies will even include additional living expenses coverage. In other words, they reimburse you for costs incurred while staying in a hotel or rental unit — like an apartment — while you wait for your barndo to be renovated or repaired. As long as the event is covered by insurance.
This type of coverage usually features daily and total limits. However, policy owners can expand those limits for an extra cost in their monthly premium. This is another item to ask about when first getting a policy.
Types of coverage
Not all barndominium insurance policies are the same. As you might expect, the cheapest policy will probably provide the least amount of coverage.
The most expensive, on the other hand, will provide considerably more coverage.
Here’s how it breaks down.
Most home insurance policies provide three levels of coverage:
- Actual cash value
- Extended cost value
- Replacement cost value
Let’s look at each one.
Actual Cash Value
This type of barndominium insurance covers your barn home as well as the current value of your belongings before the damage.
It’s probably the most common — and the cheapest. But read on.
This is considered the most comprehensive type of barndominium insurance. It covers costs associated with, among other things, home repairs.
You should choose this type of coverage if you intend to stay in the property for a prolonged period — many years.
Also. this is a comprehensive insurance policy that doesn’t just cover the current value of your barndo. It also covers the cost of rebuilding it.
A common mistake homeowners make is insuring their properties for just enough money to cover the mortgage, which usually accounts for 90 percent of the property value. The fluctuating nature of the market makes it a wise idea to get coverage that is more than the worth of your barndo.
So, if your barndominium is worth $150,000, you’d best get $200,000 worth of insurance. If disaster strikes — like a fire, and you have to rebuild — you’ll be glad you did.
This type of coverage is similar to the actual cash value policy. However, it doesn’t consider deductions for depreciation, which means you can repair or rebuild your property only up to its original value.
That’s not good.
What barndominium insurance doesn’t cover
Although barndominium insurance covers most situations where damage could occur, it does not cover some scenarios, including acts of God and acts of war.
However, you can get riders that include certain acts of God. Like if you live in flood-prone or hurricane-prone areas.
They’re more expensive, but you can — and probably should — get these riders.
What determines barndominium insurance rates
The level of perceived risk determines barndominium insurance rates. And the level of perceived risk is determined by various factors, including:
- Past insurance claims
- Homeowner’s credit
- Past claim frequency
- The severity of prior claims
- Condition or age of the property
- Structural materials
- Proximity to safety or security systems
Although insurance companies are legally obligated to pay legitimate claims, they also want to make money. If you’ve had multiple claims in the past few months or years, it could translate to higher premiums.
Tips for cutting barndominium insurance costs
The cost of barndominium insurance varies depending on various factors. However, there are various tips you can use to cut costs when shopping for barndominium insurance.
Maintain security systems
One way to be eligible for lowerr barndominium insurance rates is to maintain security and alarm systems.
You may qualify for even lower insurance premiums if a central station monitors your home alarm. Or if the alarm system is linked directly to the local sheriff’s office.
Keep smoke alarms ready
You also need to maintain your smoke alarms. Although smoke alarms come standard in modern homes, installing smoke alarms in your barndo could save you significant amounts of money in annual premiums.
Other money-saving features
Other features that may lower your annual premiums include the addition of:
- Carbon monoxide detectors
- Sprinkler systems
- Deadbolt locks
Still more money-saving tactics
Consider raising your deductibles. The higher your deductibles, the more likely you are to qualify for lower annual premiums.
The main disadvantage of choosing higher deductibles, of course, is that the homeowner will most likely absorb costs associated with smaller claims such as:
- Broken windows
- Leaky pipes
- Damaged drywall
You can shop for multiple policy discounts. Many insurance providers will offer lower premiums to homeowners who have multiple contracts with them.
For instance, you may qualify for lower premiums if you maintain Contracts such as barndominium owners, auto, and health with the same provider.
If you plan to construct an additional structure next to your barndominium or even an addition, consider the materials that you will use.
Wood-framed structures usually have higher premiums because the material is highly flammable. On the other hand, metal homes cost less to insure because they are durable and less susceptible to damage from the elements.
Consider the negative effects of building additional features such as a swimming pool and trampolines to your home. Such features are considered likely to cause injuries and may drive your barndominium insurance rates up.
People who own their homes outright are likely to pay lower annual premiums. Barndominium insurance companies feel people with 100 percent ownership of their properties are more likely to take better care of them.
When it comes to insurance coverage, loyalty is a big deal. You are likely to pay lower insurance premiums if you stay with a provider for longer.
Tips for comparing barndominium insurance companies
All barndominium insurance companies are not the same. Some provide better policy coverage than others.
It is therefore advisable to compare insurance companies in order to find the best option.
Investigate each one
Choose legitimate and credible barndominium insurance providers. Visit the website of your state’s Department of Insurance to see the rating for different barndominium insurance providers.
Read the consumer complaints lodged against insurance companies. In addition, browse the typical barndominium insurance rates in different cities and counties.
Company health check
Look closely at the barndominium insurance companies you are interested in. Various credit agencies track consumer complaints against companies, including insurance firms.
Such agencies also rate insurance companies’ health by determining if they pay out policies in the event of claims.
Just open Google and type in “(Insurer’s Name) Complaints”. That should raise any warning flags necessary.
Many homeowners face financial frustration and significant loss while having to wait for reimbursement from their insurance providers after paying out of pocket for repairs.
Some insurance firms even outsource essential functions, including claims handling, to save money.
Ask about this practice by your potential provider. If it does so, move on.
You should be able to contact your insurance provider directly whenever you need to get claims handled or reimbursements issued.
Avoid insurance providers that do not have a clear track record for fair and timely settlements. In addition, avoid insurance companies that hold back on some of their payments until they get proof that homeowners have started repairs.
The Google search we mentioned earlier should smoke this kind of thing out.
Finding an insurance carrier that will insure your barndo should typically not present a problem. Just shop carefully for your insurance using the guidelines we’ve outlined.
And this related article we wrote about barndominium financing.