Originally a barn structure was used for various agricultural purposes. Over time, it was repurposed to function as a living area and gained a name that was a portmanteau of barn and condominium. If you are on a journey of transitioning to live in a Barndominium, or if you own one, there are a few things you must keep in mind, chief among them is insuring the barndominium.
It is possible to get a barndominium insured. However, it is dependent on the purpose of use, neighborhood, and proximity to safety systems. When buying a barndominium insurance, it is essential to understand the terms of the coverage and the factors influencing the insurance premium rates.
|What to Look for When Getting Your Barndominium Insured|
|Eligibility for Insurance||Purposes for which the property is being used, ratio of storage space compared to living space, number of electrical and plumbing fixtures|
|Insurance Coverage||Damages to the interior and exterior of the structure, injuries caused as a result of damage to the structure, contents in the structure, coverage for electrical failure and damage to pipelines|
|Out of Insurance Coverage||Acts of God such as fire, hurricane, flood, war, etc.|
|Cost of Insurance Premium||Past insurance claims, actual cash value, extended cost value, severity of prior claims, condition or age of the property, neighborhood, structural materials, replacement cost value, and proximity to safety or security systems|
Not all barndominiums are the same, and therefore, the insurance policies also vary accordingly. It is the idea of perceived risks that often dictates the eligibility and cost of insurance premiums for a barndominium. This article looks at the various insurances available for barndominiums and what you need to look for when purchasing insurance coverage for your barndominiums.
Are Barndominiums Eligible for Insurance?
Here are some of the key factors you should look into to figure out whether a barndominium is eligible for insurance or not:
- The construction of the barndominium
- Its style and purpose
- The proximity of the barndominium to other buildings in the neighborhood
- The safety and security systems
The Purpose for Which the Barndominium Is Being Used
Typically constructed with sheet metal steel frames and with roll-up doors, barns were originally built to store large equipment like tractors, to stow away boats, or for keeping livestock – depending on where you lived. As the concept of barndominium took off, more and more people began to use it for business, workshops, and living spaces.
Ashley Rooney’s book, Barn Again captures this shift in the use of structures originally constructed as barns. With over 240 photographs and informative texts, the book explores the many possibilities of transforming barns into beautiful living and working spaces.
The online space is choc-a-bloc with barn renovation videos like this video that shows old barns being renovated and repurposed to become a cozy living space for the family. Here’s a great example from HGTV:
The purpose for which a barndominium is being used will help determine whether the property is eligible for insurance and what the insurance premium will be.
The Ratio of Storage Space Compared to Living Space
One of the biggest characteristics that sets the barndominium apart is perhaps its versatility. Many use a barndominium as a storage space and a living area complete with a kitchen and bathroom. Others use the barndominium as a shop or as a workspace and have found it particularly helpful in reducing the commute time to work.
Insurance agents take into account the ratio of storage and business space in the barndominium compared to the actual living space before determining the insurance eligibility of the barndominium.
Utility Fixtures and Proximity to Safety and Security Systems
The amount of electrical and plumbing fixtures also influences the barndominium insurance premium. The insurance agent takes into account the nearest safety systems, such as the fire hydrant and fire stations, in the neighborhood. This helps them to understand whether damages can be easily controlled should an untoward incident occur.
Insurance agents will also especially look at the electrical and plumbing fixtures of the barndominium to ascertain that these fixtures comply with the local code regulations. Barndominiums that do not adhere to the code regulations have a lesser chance of obtaining insurance.
What Is Provided in the Insurance Coverage?
Standard barndominium insurance provides coverage for several scenarios. This includes damages to the interior or exterior of the structure and personal injuries caused due to such damages. There is insurance coverage for the contents within the structure itself, including coverage for electrical failure as well.
Damages to the Interior and Exterior of the Structure
Any damages suffered by the barndominium, whether on the interior or the exterior of the structure is usually covered in the insurance policy. This also includes damages caused due to vandalism, structural damage caused due to accidents, and even coverage for electrical failure.
Injuries Caused as a Result of Damage to the Structure
The barndominium insurance policy covers personal injuries resulting from any damages to the structure. This may include any medical bills incurred or any temporary or permanent disability that may be caused as a by-product of the damages suffered by the barndominium structure.
An ideal barndominium insurance policy also covers homeowners from lawsuits filed by third parties who incurred damages or personal injuries while in the barndominiums.
Coverage for Contents in the Barndominium Structure
A barndominium insurance includes coverage for the contents within the barndominium. Appliances, furniture, and clothing form most of the contents of any housing structure. A barndominium insurance policy provides cover for all of these contents.
This FAQ video answers some of the key questions related to barndominium insurance:
What is Out of Insurance Coverage?
There are, however, quite a few things for which an insurance cover is generally not provided. These may include damages suffered by the structure due to riots, flooding, earthquakes, war, or any event beyond the reasonable control of man.
In certain scenarios, coverage may still be secured by including a rider to the insurance policy. This can be an added cost, but it could be beneficial should any unforeseen and unfortunate calamity occur.
It is important to note that some barndominium insurance policies do not provide cover for freestanding structures. Freestanding structures are those that are built separately from the main house. Examples of these include garages and sheds.
As such, it is important to check with your insurance provider if a barndominium, which is usually built separate from the main house, will be excluded from the insurance coverage.
Damages Caused Due to Fire, War, Earthquakes, etc.
In legal parlance, the term given to events beyond the reasonable control of man is Force Majeure, or an Act of God. This is a commonly found clause in almost all insurance policies.
This clause absolves the insurance company from compensating the homeowners for any losses suffered due to natural disasters such as fire, hurricane, flood, earthquake, etc. It also excludes damages caused by riots, civil or military disturbances, acts of war or terrorism, nuclear catastrophes, and such other disasters from the ambit of its insurance coverage.
Another commonly occurring ground for denial of insurance coverage is when the barndominium properties suffer damages due to neglect and poor maintenance of the property. The burden lies on the owner of the barndominium to ensure that it is well maintained at all times.
Kinds of Barndominium Insurance
The kinds of insurances available for barndominiums can be classified into three major categories: actual cash value, extended value, and replacement value of the property. Here is a summary of what each of these insurances covers and a table showing the key differences that set them apart:
Actual Cash Value
An actual cash value barndominium insurance determines the cost of the structure and the current value of the contents, such as furniture, appliances, and clothing housed within that structure. This insurance pays for the actual cash value of the property and the belongings before the damage.
A more comprehensive type of barndominium insurance takes into account any costs associated with home repairs and the actual cost value of the structure and the belongings. It is advisable to opt for this insurance policy if you plan on staying in your barndominium for a long time.
The cost of the insurance premium for an extended cost value is likely to be higher than the insurance for an actual cash value. It covers not only the current value of the barndominium but also the cost of any repair work, including the cost of rebuilding it.
Some barndominium insurance policies may even include additional living expenses coverage by reimbursing you the costs for staying in a hotel or other rental units such as an apartment while the barndominium is being repaired or renovated after the damage.
This kind of insurance coverage is only applicable if the events that gave rise to the damages are covered under insurance terms.
This type of insurance provides similar coverage to the actual cash value policy. However, there are slight differences.
While actual cash value only compensates you for the value of the item as if it was being sold at the time of the damage, replacement cost coverage compensates for any repair or rebuilding work to the property up to the original value of the belongings or structure.
If incurred during the repair and rebuild process, additional costs are not included in the insurance coverage.
|Insurance Coverage Comparison Table|
|Kind of Insurance||Value Determination||Coverage||Costs|
|Actual Cash Value||Cost of the structure and the current value of the contents||Pays for the actual cash value of the property and the belongings as if it was being sold at the time of the damage||Relatively Lower|
|Extended Value||Takes into account costs associated with home repairs in addition to the actual cost value||Pays for any repair work in addition to the actual cash value||Relatively Higher|
|Replacement Cost||Considers the original cost of the property and the belongings therein||Compensates for any repair or rebuilding work to the property up to the original value of such belongings and/or structure||Relatively Lower|
What Factors Determine the Cost of Insurance Premium?
Just as each barndominium is different in its own way, the insurance policies that provide coverage to these barndominiums also differ considerably.
The policies not only differ in scope but also in pricing as well. Some barndominium insurances come at a relatively lower premium, while others are more costly. This could be for a variety of reasons and is largely dependent on the unique history and characteristics of each property.
Past Insurance Claims
Insurance companies are legally bound to pay legitimate claims, but they also have their own set of parameters regarding the company’s risk appetite and tolerance.
A barndominium owner who has made multiple insurance claims in the past could mean a higher risk to the insurance company as the chances of the homeowner claiming insurance coverage in the future are also likely to be more. To offset this risk, insurance companies may charge higher premiums to keep their interests protected.
Severity of Prior Claims
When an insurance agent looks at the past insurance claims, they are not just looking at the frequency in which the claims were made, but also how severe the damages were each time.
A property that is frequently and severely damaged may have relatively lesser chances of being eligible for insurance. If, however, they are somehow considered eligible, the insurance premiums will be set at a much higher amount to balance the risks associated with insuring a damage-prone property.
The graph below has been sourced from the Insurance Information Institute website. Insurance Information Institute is a trusted source for providing data-driven insights on insurance to empower customers. It shows a ranking of various homeowner’s losses based on the severity of their claims.
Image Credit: Insurance Information Institute – Facts + Statistics: Homeowners and renters insurance
Condition and Age of the Property
It is commonly seen that old properties or properties that are not maintained well tend to cost extra in insurance premiums. It is the same with barndominiums. An insurance agent will consider a poorly maintained property to be prone to damages and in frequent need of repairs. This would translate into a higher insurance premium for the owner of the barndominium.
The neighborhood in which the barndominium is built will also impact the insurance cost and coverage. Depending on how close the barndominium is to the safety and security systems and its proximity to its next-door neighbors, the policy’s rates would vary.
A barndominium in a thriving and peaceful residential neighborhood where all the safety measures are easily available will incur a lower insurance cost than in a neighborhood where there are more vandalism cases and other crimes and disasters reported.
If your barndominium is not compliant with the area’s zoning regulations, you can either modify the construction so that it is compliant or request a waiver from the zoning board. Seeking your neighbors’ approval will increase your chances of securing that waiver.
While insurance companies do provide barndominium insurance, they may have certain restrictions. Not all insurance companies provide insurance for structures that have metal roofing or metal sidings. However, there are multiple benefits to using metal sheeting, and some insurance companies do recognize these benefits.
Metal can withstand the ravages of rough weather much better than wood. It can provide much better protection in the case of storms and withstand earthquakes.
Metal structures do not combust easily, so the likelihood of catching fire by a barndominium made of metal sheeting is negligible. Also, unlike wooden structures, barndominiums do not suffer from the threat of rot, mold, and mildew, thereby giving the structure a much longer lifespan.
|Factors Affecting the Cost of Insurance Premium for a Barndominium|
|Categories||Factors||Favorable (✔) / Unfavorable (✘)|
|Past insurance claims||Frequent past insurance claims||✘|
|Less frequent past insurance claims||✔||✔|
|Severity of prior claims||Fire and lightning||✘|
|Bodily injury and property damage||✘||✘|
|Wind and hail||✘||✘|
|No prior claims||✔||✔|
|Condition or age of the property||Old property||✘|
|New and well-built||✔||✔|
|Neighborhood||Thriving and peaceful neighborhood||✔|
|Access to safety and security systems||✔||✔|
|Crime infested neighborhood||✘||✘|
|Disaster prone neighborhood||✘||✘|
|Low proximity to safety and security systems||✘||✘|
|Structural materials||Robust structural materials that can withstand earthquakes and fire||✔|
|Weak materials vulnerable to rot, flooding and fire||✘||✘|
Finding an insurance company to insure your barndominium may be tricky, but it is not difficult. However, take some time to look at what each of the insurance providers offers by way of coverage and costs before signing the dotted line.
Hopefully, you will find the points listed in this article helpful as you choose the best insurance policy for your barndominium.
- Wikipedia: Barndominium
- Nearsay: What Farmers Need to Know About Barndominium Insurance
- Burtnett Insurance: Barndominium Insurance
- Architecture Lab: What are Barndominiums and Why You Should Buy One
- Barndominium Life: Playing it Safe – Who Issues the Best Barndominium Insurance
- Wise Insurance Group: Barndominium Insurance
- Armstrong Insurance: Barndominiums – we insure them too!
- MBMA: How Metal Building Insurance Costs Compare to Other Building Types
- Alford Insurance: Barndominiums
- Barndominium Life: What is a barndominium?
- FBIBuildings: 6 Common Questions About Pole Barn Insurance
- The Balance: Replacement Cost Insurance v. Actual Cash Value