If you've had the good fortune of experiencing financial success in your life and you've invested a great deal in your home, homeowners insurance is one way to protect some of your most valuable assets. However, when shopping for insurance, you may find that standard policies don't quite meet your needs. Depending on the reconstruction cost of your home they may exceed the company’s dwelling policy limit. Here we will explain which type of coverage is best for your high-value home, what considerations to be aware of, and how our independent insurance agents are here to help with all kinds of high-value home insurance policies available.
What Is High-Value Home Insurance and Why Do Luxury Homes Need It?
In short, high-value home insurance is a policy that's designed for homes valued at $1 million or more.
With high-value homeowners insurance, allowed coverage limits are much higher than with traditional homeowners policies, which makes this type of policy perfect for individuals with luxury estates. The value of your home and possessions is factored into your specific policy.
Obviously, all homes (and the possessions within) have different total values. When owning an expensive home, your personal estate will demand higher coverage needs tailored specifically for you. Your policy will need to provide coverage in the event that your home is badly damaged and needs to be rebuilt — up to its original value.
Now that we've covered what high-value home insurance is, it's important to determine why luxury homes need to be insured in the first place. Here are just a few reasons why luxury estate owners should look into getting coverage:
- Luxury home owners may have hired staff (for cleaning, cooking, etc.) in addition to other guests in their home at any given time. With all these extra bodies in and around the estate, homeowners may rightfully be concerned about theft.
- Possessions that are higher-value are also highly attractive to burglars. In addition to loss due to theft, burglars may also cause damage to the home or property upon their intrusion, resulting in more financial loss.
- Luxury items that appreciate in value (i.e., custom stained-glass windows from Italy, a cellar stocked with fine wines from France, Persian rugs, etc.) may not have their full potential worth realized by standard homeowners insurance policies.
Basically, a high-value home insurance policy helps to fill in the gaps that would be left by a traditional homeowners insurance policy. When dealing with potentially replacing or repairing luxury estates and valuables, these are gaps you can't afford not to fill. Only a high-value home insurance policy can recognize and honor the full value of your luxury estate and possessions.
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What Does High-Value Home Insurance Cover?
High-value home insurance and traditional homeowners insurance have several key differences. These differences are especially broad in the type of coverage and coverage limits provided by each type of policy. A standard home insurance policy just doesn't offer enough types of coverage or a high-enough limit for high-value homes. Here are just a few differences a high-value home insurance policy provides:
Higher coverage limits
High-value homeowners insurance has higher limits and more generous settlement options. This type of policy also has much higher limits for jewelry, fine art, and other valuable items. High-value items may also be covered for accidental breakage and mysterious disappearance.
Additional Coverage Options
High-value homeowners insurance includes guaranteed replacement cost, which restores the home to its original condition even if the cost is greater than the policy limit. Policyholders can also choose to take a cash settlement instead of rebuilding the home. Standard home insurance's replacement cost coverage has a max limit included.
Superior customer service
High-value home insurance customers can receive superior customer service than that provided by a standard home insurance company. Some of these customer service perks can include risk assessment consulting and a concierge service. You can also sometimes be granted a waiver of your deductible for larger claims.
Greater additional living expenses coverage
These policies also provide higher limits or extra perks in your additional living expenses (ALE) category. ALE coverage is designed to keep your life on track with its current standard while your home is undergoing extensive repairs after a covered disaster. So while a traditional home insurance's ALE coverage might only pay for a basic hotel room, the ALE coverage in a high-value policy could pay for a suite, etc.
Identity theft coverage
Identity theft crimes are on the rise, and individuals with a high net worth are ideal targets for these criminals. High-value home insurance can provide identity theft coverage to reimburse for legal fees required to clean up the mess of this type of crime. This coverage can also potentially reimburse you for financial losses suffered while victimized.
Sewer and pipe backup coverage
High-value home insurance policies can also come with sewer and pipe backup coverage. These are endorsements that must be purchased separately with standard home insurance. However, high-value policies often make coverage for backed-up sewers and broken sump pumps, which can lead to flooding and serious water damage in the home, standard.
No-cost home inspections
While you'd be on the hook for covering your own home inspection cost with a standard homeowners insurance policy, high-value home insurance often includes this as a perk. With a free professional home inspection, your insurer can find out important details about your property. That way you can get all the coverage you really need and in the correct amount.
Another perk of high-value home insurance is coverage for a partial loss. For example, if a disaster like a fire caused damage to just half of a section of flooring, you could file a claim to be reimbursed for the repair or replacement of just the damaged portion. Standard home insurance typically does not reimburse for a partial loss.
Pair or set conditions
High-value home insurance also often includes pair or set conditions, which offers coverage for just one item that's part of a pair or larger set if it gets damaged, destroyed, or stolen. The higher coverage limits in a high-value home policy allow for reimbursement to be offered on just a portion of a set or pair. Again, this perk typically isn't offered by standard home insurance.
Employment practices liability insurance
For high-value homeowners with in-home workers like personal assistants, domestic employees, gardeners, etc., employment practice liability insurance (EPLI) can help protect against lawsuits. Your employees may press charges against you for many different claims like wrongful termination, sexual harassment, and discrimination, all of which are covered by EPLI. Some types of high-value home insurance offer this extra perk, though it may not be standard with every policy.
How Is High-Value Home Insurance Different from Traditional Home Insurance?
Beyond just understanding that typical homeowners insurance policies may not be enough to meet your high-value home needs, it's helpful to see the specific breakdown of where they might come up short if your home is especially valuable.
- Traditional homeowners policies typically place caps of $1,000 to $2,000 each on coverage for items such as furs, silver, jewelry, and fine art. High-value policies, however, come with limits of $50,000 in this category already included.
- Purchasing separate riders on these items with a traditional home insurance policy may only increase your full coverage to $10,000 for each category of personal belongings.
- Traditional homeowners policies typically limit the cap on contents coverage at 50% to 70% of your home’s value — usually not enough for high-wealth individuals and collectors.
High-value home insurance addresses the issue of coverage needs that extend beyond the coverage caps locked on to numerous categories by traditional homeowners insurance policies.
With high-value home insurance, the need to purchase separate endorsements or insurance riders in order to cover the additional value is eliminated.
|Typical limits for high-value items in standard home insurance|
|Photo & Video Equipment||$1,500|
Individuals with an extensive list of luxury items requiring higher coverage amounts can get all their needs met, wrapped up in one neat and tidy policy. To make matters even better, having a single policy without extraneous endorsements or riders will ultimately save you money.
What Is Considered a High-Value Home?
How do you determine if your home is a candidate for this type of policy? Typically, homes valued at $1 million or greater qualify for high-value home insurance coverage.
Keep in mind that home values vary throughout the country and that insurance companies differ in their coverage requirements. You'll need to shop around to find the best policy, since not all the available options will apply to your unique needs. An independent insurance agent can make this process much easier for you.
How Much Does High-Value Home Insurance Cost?
High-value home insurance, with its added perks, costs considerably more than standard homeowners insurance in the US. Recent data shows that homeowners across the nation pay an average of $1,249 annually for standard homeowners insurance. High-value home insurance policy costs will be considerably higher, given their increased coverage limits and the type of property they're designed for.
To save money on your high-value homeowners insurance premiums, work together with an independent insurance agent. They can help you find an insurance company that offers the best rates while still providing all the coverage you need to insure your high-value home. An independent insurance agent can also help you find any discounts you may qualify for on coverage.
How Do Insurance Companies Determine Property Values?
Typically, an insurance company will send out an expert appraiser to your estate to examine, assess, and document the value of your home and luxury possessions, including jewelry, artwork, collectibles, antiques, and custom materials/construction.
Should you disagree with the final report given by the appraisal, you may request a second appraisal, or appeal it by conducting your own expert assessment.
Your coverage needs may change over the years as you redecorate, renovate, or otherwise revamp your home. Your insurance company may require periodic assessments in order to accurately keep your coverage up to date.
An assessment of your estate, as well as a review of your insurance policy, is encouraged at least once every five years.
Get High-Value Home Insurance Coverage
PURE insurance will get you the best coverage for your home.
Compare High-Value Home Insurance Quotes with an Independent Insurance Agent
We all know how valuable your time is, so why spend it doing all the hard work yourself? From insurance packages to add-on policies, our wise and helpful independent insurance agents will help you determine which types of coverage make the most sense for you.
Our independent insurance agents stay on top of the industry and all the latest discounts so you don’t have to. That means they’ll help find the right coverage at the right price for you.
They’re not just there at the beginning, either. If disaster strikes, your agent will be there to help walk you through the claim process and make sure you are getting the benefits you're entitled to. Now that’s thinking ahead.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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