99. Why Your Insurance Company Needs to Know About Your New Garage

Congratulations! You’ve just finished building that beautiful new garage you’ve always wanted. Maybe it’s a spacious two-car haven for your vehicles, or perhaps a detached workshop complete with storage. While you’re busy admiring the fresh paint and organizing your tools, there’s one crucial step you absolutely cannot skip: telling your insurance company.

A new garage might seem like a simple home improvement, but it has significant implications for both your Car Insurance and your Homeowners Insurance policies. Failing to notify your insurer could lead to denied claims, inadequate coverage, or even policy cancellation. Here’s a detailed look at why this notification is essential.

1. The Impact on Your Car Insurance Premium (The Good News!)

For car owners, the primary benefit of a new garage is enhanced security. Insurance companies use risk assessment to determine your premium, and where your vehicle is parked overnight is a major factor.

Reduced Risk of Theft and Vandalism

• Open vs. Enclosed: Parking a vehicle inside a locked, private garage is significantly safer than leaving it exposed on the street or in a driveway.
• Lower Premiums: Insurers often offer discounts (sometimes substantial ones) for garaged vehicles because the risk of theft, vandalism, and weather damage (like hail or falling branches) is dramatically reduced.
• Proof of Security: When you notify your insurer, they will update your policy to reflect the new, lower-risk parking location, potentially saving you money immediately.

2. The Critical Role in Your Homeowners Insurance

While the garage protects your car, the structure itself is an addition to your home’s value and liability profile, making notification mandatory for your homeowners policy.

A. Increasing the Dwelling Coverage

Your homeowners insurance policy includes "Dwelling Coverage," which covers the cost to rebuild your home. A new garage, whether attached or detached, increases the total replacement cost of your property.

• Underinsurance Risk: If a fire or major storm destroys your property and your insurer only has the old, lower replacement value on file, you will be severely underinsured. You would have to pay the difference out-of-pocket to rebuild both the house and the new garage.
• Accurate Valuation: Your insurer needs to adjust your coverage limits to reflect the new structure's size, materials, and features.

B. Coverage for Contents and Personal Property

Garages aren't just for cars; they often house expensive tools, lawn equipment, sports gear, and workshop materials. These items fall under the "Personal Property" section of your homeowners policy.

• Increased Contents Value: The addition of a new, larger space likely means you’ve acquired more contents. Ensure your personal property limits are high enough to cover everything stored in the garage, especially high-value items like specialized tools or power equipment.

C. Liability Concerns

Any structure on your property increases your overall liability exposure. If someone is injured inside your new garage (e.g., a visitor trips over a workbench or is hurt by a faulty door), your liability coverage is activated.

• Detached Structures: If the garage is detached, it may fall under "Other Structures Coverage." This coverage typically has a limit (often 10% of your Dwelling Coverage). If your new garage is particularly large or expensive, you may need to increase this specific limit.

3. Avoiding Policy Violations and Denied Claims

The most serious consequence of failing to inform your insurance company is the risk of a denied claim.

• Material Change: Insurance contracts require policyholders to report any "material change" to the insured property. Building a permanent structure like a garage is definitively a material change.
• Claim Investigation: If you file a claim (e.g., a fire starts in the new garage), the adjuster will investigate the structure. If they discover the garage was built without being reported or covered, the insurer may argue that you misrepresented the risk, potentially leading to the denial of the entire claim.
• Premium Recalculation: Even if the claim is paid, the insurer will recalculate the premiums you should have been paying since the construction date and may require a lump-sum payment.

What Information Does Your Insurer Need?

When you call your agent, be prepared to provide the following details about your new garage:

1. Type: Attached or Detached?
2. Size: Square footage and number of bays (e.g., 20x20 feet, two-car).
3. Construction Materials: Foundation type, roofing, and siding materials.
4. Features: Electrical wiring, plumbing, heating/cooling, specialized doors, or finished living space (e.g., an apartment above the garage).
5. Security Details (for Car Insurance): Type of lock, alarm systems, and whether the vehicle is always parked inside.

The Takeaway

Building a new garage is an investment in your home and your vehicles. To protect that investment, you must treat it as a significant insurance event. Notifying your insurance company ensures you receive the proper coverage for the new structure, maintain adequate liability protection, and, best of all, potentially qualify for a discount on your car insurance premium.

Don't wait until disaster strikes. Make that call today!