What You Need to Know When Insuring a High-Value Home
As the owner of a high-value home, you’ve probably been asked by your auto insurer to bundle your auto and homeowners insurance to receive a discount on your rates. It’s understandable that they are attempting to secure more of your business, but are they offering you the proper coverage you need for your high-value home?
High-value home insurance isn’t the same thing as a standard homeowners policy you’ll see advertised on television. Instead, it’s offered by insurance companies, brokerages, and independent insurance agents that specialize in working with high-net-worth clients with homes valued at $1 million or more.
High-value home insurance is more than a homeowner’s policy; it’s customized coverage for people with high-value homes and/or a significant amount of assets in the home.
High-value home insurance provides three distinct advantages that you need to know about:
• Expanded policy coverages and limits
• Additional benefits and services
• Extra care and expertise
Let’s take a look at each.
Expanded Policy Coverages and Limits
Many insurers will look to limit the amount they pay out in a claim and want to keep the premium low so they will offer coverage that is inadequate for most high-value homes. Even when the home itself is covered for the proper amount, there are many other aspects that most mass-market companies don’t consider, such as high-end appliances, collections of valuables, other structures, etc.
An insurance agent or broker that understands the difference between a standard homeowner’s policy and a high-value home policy is able to point out the differences between the two and will explain the key differences. Here are a couple of differentiators that exemplify why high-value homes need more coverage than what a standard policy offers.
Replacement cost: Replacement cost coverage, which high-value home policies generally include automatically, reimburses you for new items to replace the damaged ones – such as new living room furniture. Standard policies will generally offer “actual cash value replacement,” which would give you only the depreciated value of your furnishings, likely leaving you far short when you want to buy new items.
Loss of use: Also known as “additional living expenses (ALE),” loss of use coverage reimburses you for extra expenses that you incur if you can’t live in your home due to a covered loss, such as:
• Hotel or temporary living quarters costs
• Restaurant meals
• Pet boarding
• Storage fees
• Rent you would have collected if it was a rental property
• And more.
The maximum benefit for loss of use with a standard policy is limited. For example, If your home is valued at $1 million, your benefit maximum may be 20% of the home’s value, which may not be enough if it takes a couple of years for your home to be rebuilt or repaired.
With many or more high-value home policies, there are no limits for your additional living expenses incurred.
Check out the additional coverage available for high-value homes:
|Features||Kelly Klee||Standard Market|
|Guaranteed replacement cost||Included||Capped at 125-150% of Coverage A value|
|Back-up of sewers and drains||Included; up to dwelling value||Limited|
|Business property||Up to $25,000||Up to $5,000|
|Deductible options||Up to $100,000 available||Limited|
|Identity fraud restoration expenses, ATM robbery, and financial fraud, embezzlement or forgery||Available||Unavailable|
|Traumatic threat or event recovery||Available||Unavailable|
|Green rebuilding expenses||Available||Unavailable|
|Waiver of deductible on losses over $50,000||Available||Unavailable|
|Replacement cost cash out option||Included||Unavailable|
|Lock replacement||Included; no deductible||Unavailable|
|Loss prevention devices following a claim||Included; up to $2,500 available||Unavailable|
Additional Benefits and Services
High-value and luxury home insurers also offer other unique benefits and services you won’t find with a traditional insurance company. These benefits and services will vary by insurer, but those often offered are:
• Identity theft and cyber ransom coverage
• Cash settlement option (in place of rebuilding)
• Risk consulting and home inspections
• Deductible waiver for large claims
• Loss prevention devices (water detection sensors, flow sensors, and automatic valve shut off devices)
• Green rebuilding expenses (environmentally friendly materials or processes used to repair or rebuild or when you upgrade to more energy-efficient systems and appliances)
• Landscaping coverage
Extra Care and Expertise
Working with an insurer with expertise dealing with luxury items like wine collections or original artworks is invaluable monetarily and provides peace of mind. In addition, knowing that the insurance company is experienced with high-value items and property is a value that you won’t get from standard insurance companies.
Personalized service and extra care are trademarks of high-value insurance companies and brokers. For example, if you have landscaping coverage and a variety of trees and shrubs need to be replaced due to a covered loss, such as a fire or lightning, a high- value insurance provider may not only cover the loss financially, they may also go above and beyond to locate the type of landscaping you prefer on your property.
Another benefit of working with a high-value insurance company is they also typically provide other insurance products for high-net-worth individuals, such as:
• Vacation homes
• Income property
• Luxury/vintage car
• Umbrella (excess liability)
Kelly Klee works specifically with high-net-worth individuals and families. We know how to customize your high-value home policy to offer you the right amount of protection for your property and possessions. Call us today at 844-885-1600 and make sure you have proper coverage.