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How to find high-quality insurance coverage for an expensive home.
If you own an expensive home — generally starting at $750,000 and up — your insurance needs may differ from those of a standard homeowner. Because your home is worth more, it is also more expensive to repair or replace. So what is high-value homeowners insurance, and is it necessary?
High-value homeowners insurance coverage protects homes that are more costly than the average home. Historic properties, homes of architectural significance, and houses with unique features or those constructed from rare or expensive materials are examples of such properties. Condos and luxury apartments can also be designated as high-value.
Owning an expensive home presents some insurance challenges — not only because of the price of the home itself but also because of the higher personal liability and personal property limits required by wealthier customers. Insurance companies that cater to wealthy customers may also offer extra perks.
Every company provides different insurance coverage, but high-value policies typically include certainbaseline features, starting with higher liability limits. These higher limits protect you against injuries or damages occurring on- or off-property. If you accidentally injure someone while on vacation, liability coverage would step in to cover the cost of their injuries. It also works to protect you in the event you are sued, covering legal fees up to your policy limits.
Many expensive properties feature extras like swimming pools and play equipment. These are known as attractive nuisances. The property owner is considered responsible for any harm caused by them, even if they are used without the homeowner’s consent. For instance, if a child in the neighborhood sneaks into your yard and sustains an injury on your trampoline, you could be held liable. Higher liability limits can come in handy if your property is home to attractive nuisances.
Premium home insurance companies often offer coverage types not found elsewhere. These providers are aware of their clients' special coverage needs, going out of their way to offer premium coverages and special perks that many traditional home insurance companies can't.
For example, high-end insurer Chubb offers flood insurance, a form of coverage not offered by most standard companies. Below are more examples of coverage options exclusive to high-value homeowners insurance companies.
If a covered loss renders your home unlivable, most upscale home insurers provide living expenses to cover the costs of temporary housing and meals. In most cases, your additional living expenses have no upper limit, meaning that you won’t face a dramatic change of lifestyle when you go through a loss.
An increasingly important form of insurance is identity theft coverage. Identity theft coverage protects you from fraudsters assuming your identity to steal your assets. Some insurance companies keep a constant lookout for nefarious activity, looking for unnatural usage of financial and online accounts.
Most standard home insurance policies don’t provide coverage for drainage backups or issues with sump pumps and sewers. Many high-value home insurers provide this coverage standard.
Many higher-end insurers offer home inspections at no additional cost. This allows insurance companies to cover the property at the correct level. This is highly recommended, especially if your home has custom finishes that could increase replacement costs.
In the event a covered loss affects only one portion of a home — such as damage to half of a bathroom’s floor tiles — most insurers are under no obligation to ensure the replacement materials match the originals. Standard homeowners insurance policies will replace the flooring with like kind and quality. In some cases, these won’t necessarily match. High-value home coverage often goes a step further by matching replacement materials with the originals, even if it means replacing undamaged materials.
If a single high-value item in a pair or set is damaged, standard insurance companies do not typically cover the value of the entire set. Because of the elevated coverage limits of high-value home insurance companies, pairs and sets are often fully covered even if the damage is sustained by just one item.
When looking for a homeowners insurance policy, one very important consideration is the amount at which your home and personal property will be replaced. There are typically a few options available, including actual cash value and replacement cost coverages.
Those with high-value homes will want to consider a policy with replacement cost coverage. This coverage replaces your home and belongings at their full value, unlike actual cash value, which factors in depreciation. While this coverage may increase your premiums, your property will be more comprehensively protected in the event of a loss.
At an additional cost, you may purchase extended replacement cost coverage. Extended replacement cost will pay to replace your property up to a certain percentage over its value. This coverage combats rising materials and labor costs that may make replacement an expensive proposition. Most high-end home insurance companies offer a form of extended replacement cost coverage as a standard feature.
If you have an expensive home, you may also own high-value items. You’ll want to protect these as well. Items such as fine art, antique furniture, jewelry, are often covered up to certain amounts by standard home insurance, though usually only up to $2,500. This limit may be too low for high-net-worth individuals. The following chart shows typical coverage limits for such items.
|$200||Money, Gold, Coins|
|$1,500||Jewelry, watches, furs||Theft-only|
Most upscale home insurers provide higher limits for such items as a standard feature of their policies. This extra protection covers against theft or damage, with some items being covered up to $25,000.
Another option is a scheduled personal property endorsement for expensive personal belongings. You and your insurance company can agree on a value for any such items, typically via an appraisal of the item. This is called agreed value coverage.
An umbrella policy — or personal excess liability policy — is a good way for high-net-worth individuals to further protect their assets. Luxury home insurance companies provide some form of excess liability coverage. Umbrella policies kick in once the liability limits have been reached. They can typically be increased in $1 million increments. Companies offer this coverage in varying amounts. For example, AIG offers liability limits as high as $100 million.
If you own a second — or vacation — home, you may need a separate insurance policy for that property. Insurance for a second home is typically more expensive than it is for a primary dwelling, as the property is likely to be unoccupied for large periods of time. This is especially true if your home is in an area susceptible to dangerous weather events, such as a beachfront home.
Certain carriers may allow you to bundle your policies, though this will vary from company to company. If this is not allowed, you will need to seek out a separate policy to cover your second home.
You can expect an upscale insurance company to go above and beyond when you file a claim. The following luxury home insurance companies are notable for their high-value coverage offerings.
Chubb prides itself on servicing the high-value home market. It provides unique coverages such as cyber protection and identity theft and guarantees replacement of its clients' property and valuables at full value.
Another esteemed company in the luxury insurance space, AIG makes a point of partnering with homeowners to prevent losses and minimize risk. In most cases, AIG replaces property at full value, even in excess of policy limits.
PURE emphasizes repairing its clients' homes to like kind and quality in the event of a covered loss. The company also offers a cash payout option with no obligation to make repairs. PURE's policies cover expensive jewelry items up to $50,000 — up to $25,000 for a single item.
NatGen Premier protects homes valued at $750,000 or more under its Premier Client Home Endorsement, providing guaranteed replacement cost, sewer and pipe backup coverage, and identity theft protection.
The more assets you own, the more protection you need. If you are a high-net-worth individual with high-value property, finding the right insurance policy is crucial. With their unique options and customized policies, high-end insurance companies may better fit your coverage needs than standard homeowners insurance companies.
This article was written by one of The Zebra’s resident insurance experts. Each article is thoroughly researched to ensure we provide useful and actionable insurance information. That’s insurance in black and white.®