Garages Underneath Houses: Higher Insurance, Why?

When it comes to insuring houses with garages, there are a few factors to consider. Firstly, the type of garage, whether it is attached or detached, plays a significant role in determining insurance coverage. Attached garages are typically considered part of the dwelling, while detached garages fall under other structures coverage. Additionally, the construction type and materials used can impact insurance rates, with wood-frame homes generally being more expensive to insure than brick ones due to their higher susceptibility to fire and wind damage. The location of the house, including proximity to water and fire safety services, also comes into play when calculating insurance premiums. While garages underneath houses, or basement garages, may not directly impact insurance rates, they can affect the resale value of the home due to potential inconveniences and heating and cooling issues.

Attached vs. detached garages

When it comes to insurance, there are several factors to consider when choosing between an attached or detached garage. Firstly, the type of garage you have will impact your insurance coverage and premiums. If you have an attached garage, it is considered part of the structure of your home and is typically covered under the dwelling coverage portion of your homeowners' insurance policy. This means that if your garage is damaged or destroyed by a covered peril, such as a fire or vandalism, your insurance company will help pay for repairs or rebuilding under the replacement cost coverage. On the other hand, if you have a detached garage, it falls under the "'other structures' coverage" of your homeowners' insurance policy. This type of coverage typically has a limit of around 10% of your dwelling coverage, which can result in a lower payout in the event of a claim.

The construction type and materials used for your garage also play a role in insurance costs. Attached garages are generally cheaper to build and insure due to fewer construction materials and lower risks. However, an attached garage may slightly increase your insurance premiums because of the increased home value and potential risks, such as a fire spreading faster. In contrast, detached garages are standalone structures, and their insurance coverage typically protects them from damage. Still, it's important to confirm with your insurer whether your policy includes coverage for standalone structures.

Your decision between an attached or detached garage should also consider factors such as convenience, cost, security, noise levels, property value, and how it fits with your home's layout and long-term needs. For example, attached garages offer direct access to your home and can save on building costs, while detached garages provide greater flexibility in space and design. Additionally, the size and location of your property, as well as local rules and codes, will influence your choice.

It's worth noting that if you run a business out of your detached garage, you may need to add a commercial endorsement to your policy to ensure protection against standard perils. Furthermore, factors such as your home's proximity to a body of water, fire station, and fire hydrant can also impact your insurance premium, as they relate to flood risk and fire protection.

Proximity to water

Insurance carriers use reinsurers to manage their risk and maintain affordable premiums. When an insurance carrier sells a policy to a homeowner, they then purchase wholesale policies from international reinsurers, who can bear the financial burden of potential claims. This practice helps to keep rates competitive, even for homes near water. However, it is important to note that higher deductibles are often applied to homes near water to prevent frivolous claims and ensure coverage for catastrophic events.

The specific distance from water that insurance companies consider can vary. Some companies may ask if the property is within 400 meters of water, while others may use different thresholds. It is essential for homeowners to be transparent about their proximity to water to avoid issues with insurance claims in the future. Even a small stream or ditch can be considered a body of water and impact insurance rates if it poses a potential flood risk.

When assessing the impact of proximity to water on insurance rates, it is crucial to consider the location's flood risk. Homes located on higher ground or far from floodplains may not experience the same insurance premium increases as those in low-lying areas. Additionally, the size and depth of the body of water play a role. A small stream or ditch is less likely to impact insurance rates than a large river or ocean.

In conclusion, proximity to water can significantly affect home insurance premiums due to increased wind exposure and the potential for hurricane damage. Insurance carriers use reinsurers to manage risk and maintain competitive rates, but higher deductibles are often applied to homes near water. The specific distance from water considered by insurance companies may vary, and it is essential for homeowners to be transparent about their proximity to water to avoid issues with future claims.

Construction type

The construction type of a house is a significant factor in determining insurance costs. Insurance companies consider the building elements and materials used in a house's construction to assess the risk of insuring it. For instance, in Florida, a house's siding type is a critical factor in determining insurance premiums. Wood frame homes are more expensive to insure than brick ones because wood is more susceptible to fire and wind damage. Masonry homes, made from materials like brick, stone, concrete, or glass, are generally more durable and may benefit from lower premiums.

The age of a house and its construction method also play a role in insurance costs. Older homes may have been built with materials that are no longer considered safe or up to code, leading to higher premiums. Conversely, sturdy homes constructed with long-lasting materials can obtain coverage at a lower premium. This is especially important in regions like Florida, which is prone to hurricanes, where strong and durable homes are favoured by insurers and homeowners alike.

The type of garage a house has can also impact insurance rates. Detached garages are typically considered "other structures" and may require separate coverage. Standard homeowners' policies often allocate a limited percentage of the policy's face value to cover detached buildings. On the other hand, attached garages are usually covered under the dwelling coverage of a homeowner's policy.

Additionally, the use of a garage can influence insurance costs. If a detached garage is used for a home-based business, a commercial endorsement may be required to protect against standard perils. This is a common requirement for any home-based business.

Maintenance issues

Insulation and Temperature Control: One common issue with garages underneath houses is inadequate insulation. If the garage is not properly insulated, the adjacent rooms in the house may become noticeably colder during autumn and winter. This can lead to higher utility bills as the heating system works harder to maintain a comfortable temperature. To mitigate this problem, installing insulated garage doors can help regulate temperature and reduce energy costs.

Structural Integrity: Over time, a lack of proper maintenance can lead to structural issues with the garage. This includes problems like water damage from leaks, termite infestations, or even instability due to sloppy construction. In these cases, homeowners are generally responsible for the repair costs as maintenance issues are typically not covered by standard home insurance policies.

Vandalism and Accidental Damage: While not strictly a maintenance issue, it's important to note that vandalism and accidental damage, such as backing into the garage door with your vehicle, are typically covered by home insurance policies. These incidents can, however, be costly to repair and may require filing a claim with your insurance company.

Outbuilding Considerations: If you use your garage for business purposes, you may need to add a commercial endorsement to your policy. Standard home insurance policies may not cover outbuildings used for business activities. Additionally, the size and construction materials of your garage can impact your insurance costs. Sturdy construction using long-lasting materials may help you obtain lower premiums.

Proximity to Hazards: The location of your home, particularly its proximity to hazards like bodies of water or fire stations, can significantly impact your insurance premiums. For example, living close to a body of water may increase your flood risk, while being farther from a fire station or fire hydrant can elevate fire-related concerns. These factors are considered when determining your insurance rates and coverage.

While houses with garages underneath can have unique maintenance challenges, proper care and attention to these areas can help ensure adequate insurance coverage and peace of mind.

Resale value

Adding a garage to a home can be a significant investment, increasing both its resale value and overall utility. A garage can add between 5% to 20% to a home's resale value, depending on factors such as location, design, and the existing housing market. In addition, the presence of a garage can enhance a home's curb appeal, especially if it features attractive architectural elements that complement the house.

The advantages of a garage are not just limited to its impact on resale value. Garages provide an extra layer of security for vehicles and personal belongings, reducing the risk of theft or vandalism. They also offer significant protection from weather-related damage, helping to prolong the life of vehicles and reduce maintenance costs. Furthermore, garages can serve multiple functions, providing ample storage space for tools, seasonal items, and outdoor equipment, enhancing a home's overall functionality.

While a garage can enhance a home's resale value, there are considerations to keep in mind. For example, if the garage is not insulated correctly, it can lead to higher utility bills, affecting the home's energy efficiency. This can impact the resale value, as proper insulation is essential for maintaining a comfortable temperature in the adjacent living spaces.

Additionally, the type of garage, such as attached or detached, can influence the resale value. Attached garages tend to be more cost-effective since they can utilize the existing walls and power of the main house. On the other hand, detached garages may fall under the "other structures" section of an insurance policy, requiring separate coverage and potentially impacting the overall resale value of the property.

Overall, when considering the resale value of a home with a garage, it is essential to weigh the benefits of added functionality, security, and curb appeal against potential challenges related to insulation, garage type, and construction costs.

Frequently asked questions