Being located in the Midwest, we all know that Mother Nature’s behavior is very unpredictable. Widespread storms can pop up at anytime, wreaking havoc on your post frame building.
This is a risk for anyone that builds a pole building. In a perfect world, your brand new farm shop or mini-warehouse building will last you for decades and still be in tip-top condition that it was once it was constructed.
But what happens when a storm rolls through? What if your pole barn experiences wind damage? What if your building get hits with hail damage?
Do you know the proper steps to take if this were to happen to you? Did your post frame builder point you in the right direction about post frame building insurance?
Before damage happens to you (because let’s be honest...there is that risk), now is the perfect time to figure out how to get the coverage you expect. It also makes you aware of the types of questions you need to ask yourself and your insurance provider.
To make it easier for you, we’ve put together a list of the six common questions that are asked for pole building insurance. It’s our recommendation for you, to use these questions as a guideline when you’re trying to decide which coverage is best for your post frame building.
6 Common Questions About Pole Barn Insurance
1. What Type of Policy Will Cover My New Pole Building?
The primary use of your post frame building will dictate the type of policy you can get, but the three most common policies are:
- Homeowner’s
- Farm
- Commercial
If you have questions about where your building will fall under, we recommend reaching out to your insurance agent. They will be able to provide you with more information about each policy and talk specific pricing with you.
Some helpful policy tips to consider are:
- Larger, non-farm outbuildings can easily be covered by raising the 'other structures' limit on your homeowners policy. This is typically less expensive than getting a completely separate policy.
- Farm buildings (any building used in the production of agricultural commodities) must be covered under a farm policy.
- Buildings used for non-farm businesses should be covered with a commercial policy. These policies are often designed with coverage packages specific to businesses, such as loss of building use, business liability, inventory, equipment etc.
2. What Is the Difference Between Actual Cash Value and Replacement Cost Policies?
Actual Cash Value (ACV) Policies pay a depreciated amount on building losses. The formula that is generally used is building replacement value minus depreciation. Keep in mind that the depreciation amount varies.
The depreciation of your pole barn will depend upon the age of the building and how well it has been maintained. An average depreciation rate for typical, older post frame buildings is 1% per year.
Helpful hint: Only material is depreciated. Labor is not. ACV policies are not related to the market value of the building.
Replacement Cost Policies pay to replace damaged property without deducting for depreciation. However, the insurance company will only pay up to the policy limit.
What does that actually mean? If it costs more to replace your post frame structure than you have it covered for, you must make up the difference. That is why it is so critical to keep your coverage up-to-date.
Some helpful policy tips to consider are:
- On a new building, you can choose the coverage type you want. There is usually no difference in premiums between an ACV policy and a Replacement Cost policy. That is because depreciation is not a factor yet.
- Older buildings may not be eligible for Replacement Cost policies. They are issued at the discretion of the insurer.
3. What Should Be Considered When Purchasing Insurance for My Post Frame Building?
It’s always best practice for you to get coverage for the “additional contents” because these are not necessarily automatically insured. If your post frame building is covered by the “other structures” portion of your homeowners policy then personal property is covered, up to the limit in your policy.
Personal property can be defined as the smaller items, like bicycles, garden tools, lawnmowers, small power tools, etc. Vehicles, including ATVs, boats and motorcycles, must be covered under auto policies.
Tractors and other farm machinery must be covered under a farm policy. Large, specialized equipment used in non-farm businesses must be covered under a commercial policy.
Some helpful considerations to be aware of are:
- If you run your business from this building, or rent it out, consider adding additional coverage for lost revenue / rent to your commercial policy.
- Liability coverage is recommended for horse barns in case someone gets injured by one of your horses or has an accident while riding.
- On commercial policies, especially if the property is located in a highly regulated municipal area, consider adding a rider/endorsement that covers any additional cost to rebuild your facility up to the current codes.
4. Is Demolition and Debris Removal Included?
With all of the policies that we have worked with the answer is yes. However, in the case of fallen trees, the coverage will only pay to get the tree off of your building.
Cutting it up and disposing of it is typically not covered by the insurance company and will need to be paid by the owner.
5. How Do I Determine the Right Coverage Amount?
New post frame building: You want to take the final price of the building, including all improvements/updates. This is included but not limited to: electrical work, plumbing, concrete, etc.
If you did any of the labor yourself, chances are you won’t do it again. Figure enough coverage to hire a contractor to do it. A good rule-of-thumb is cost of material times two.
Some people assume that concrete is indestructible and therefore doesn’t need to be covered. However, concrete can become damaged, especially if the building loss was a result of fire.
Existing post frame building: We recommend talking to your agent. They have guidebooks that help them figure approximate costs.
Another suggestion is to call the original builder to get the exact building cost and then add in any improvements or changes that were not included in the original contract.
If you have an FBi building, we can help you with this.
6. How Often Should I Meet With My Insurance Agent to Review my Coverage?
Insurance companies recommend you review your coverage every 2 years to determine if your building is adequately covered, considering such issues as improvements, inflation, contents, or new building uses.
If you have a farm policy, you should review your coverage annually to ensure that all farm equipment changes are covered.
It’s important to remember to never assume that your policy includes an inflation guard feature. That feature is fairly common on homeowner policies, but not on farm or commercial policies.
Do You Know What Steps to Take With Your Pole Barn Insurance?
As a trusted post frame builder, we don’t want these common questions to be alarming for you. We want to make sure that you feel prepared and guided along the way.
If you have any questions about your policy, or would even like our opinion to review the coverage details, please feel free to reach out to your Project Sales Consultant. They’ll also be able to help guide you in the right direction and give you their advice on coverage amounts.
You can also check out our Ultimate Guide to Pole Barn Repairs & Renovations to learn how you're covered should your pole barn need repairs in the future.
Do you have more questions that are not covered in this article? If you need help designing and planning, please contact FBi Buildings at 800.552.2981 or click here to email us. If you are ready to get a price, click here to request a quote and a member of our customer engagement team will help you determine the next steps of your projec