You spent time and money building your pole barn, so you want to protect that investment. Knowing the types of pole barn insurance helps you choose the right coverage for how you plan to use the building.
Types of Pole Barn Insurance by Use
First, a homeowners insurance policy covers other structures on the same property at an amount equal to 10 percent of the house’s value. So homeowners insurance can cover a small post-frame building.
However, if you plan to use your pole barn on a farm, you will need a farm policy. A pole barn used for a non-farm business needs a commercial insurance policy.
Actual Cash Value or Replacement Cost
An actual cash value policy covers the building’s replacement value minus depreciation. The amount of depreciation depends on how old the pole barn is and how well you have maintained it.
Older buildings typically depreciate at a rate of 1 percent per year on materials, not labor. Also, actual cash value has nothing to do with the pole barn’s current market value.
A replacement cost policy, on the other hand, pays to replace a pole barn without counting depreciation, up to the policy limit. If replacement costs more than the limit, you pay the difference.
For a new pole barn, you can choose either type of policy. The premiums should be the same, because depreciation has not yet come into play. For an older pole barn, however, you should get a replacement cost policy.
Cover Additions and Contents Too
Next, make sure your coverage includes any additions or improvements you have made to your pole barn. You should also insure the contents, including vehicles, equipment, inventory and personal property.
Vehicles belong under an auto policy, and farm equipment belongs under a farm policy. Equipment for another type of business needs a commercial policy.
You might also need extra coverage for lost revenue or rent, liability and the costs of meeting local building codes. So discuss your individual insurance needs with your agent or company. That way, you can match the types of pole barn insurance to your building.
