High-Value Home Insurance: What Is It?

Definition and Examples of High-Value Home Insurance

How High-Value Home Insurance Works

What Does the Insurance Cover?

Do I Need Home Insurance?

How Much Does Insurance Cost?

Definition and Examples of High-Value Home Insurance

High-value home insurance refers to specialized insurance available for homes valued at $750,000 or more. High-value homes are considered to be those worth $750,000 or more.

Homes that fall into this category may include historic homes or homes with special architectural features or interior design. Of course, they could simply be mansions. This type of insurance is a comprehensive package of coverages and is one of the most extensive insurance plans you can purchase. High-value policies provide much better coverage than standard home insurance policies.

Note: High-value home insurance is not limited to houses only. You can also purchase this type of policy for high-value condos.

How High-Value Home Insurance Works

If you have a home with a higher-than-average price, the standard home insurance forms that provide “average coverage” may not be sufficient to protect or replace your property if you file a claim. To ensure that your policy limits are high enough to avoid paying large amounts out of pocket, you may want to consider purchasing high-value home insurance.

Will standard home insurance be sufficient?

Although the specifics are determined by the terms set forth in your contract, standard home insurance policies cover a wide range of costs that may arise in homeownership. At its simplest, it pays the cost to repair or rebuild the structure of your home if it is damaged. It also replaces the items inside if they are stolen or destroyed. (Depreciation of your items will be taken into account, and any payments will reflect this.) It funds claims that someone may file against you due to bodily injury or damage to someone else’s property, as long as the cause is related to your home. Lastly, it covers any additional costs you may incur for living away from home while it is being repaired, such as staying in a hotel or renting a house.

What Does High-Value Home Insurance Cover?

The most common reason for choosing to purchase luxury home insurance is increased coverage limits, compared to standard home insurance policies, but it can also include a wide range of additional benefits or optional services.

Compared to standard homeowner insurance, luxury policies include larger policy limits or enhanced coverage for the following:

• Structural Repair or Replacement: The structural coverage of standard home insurance may be limited to the cost of rebuilding the house. If you believe that the true cost of rebuilding your home to the condition it was in before the damage occurred will be higher than what is stated in the contract, you will need to obtain extended or guaranteed replacement cost coverage. This often comes as an add-on or rider that costs you more each month. Conversely, many high-value home policies include extended or guaranteed replacement cost coverage as part of the package. This will allow you to rebuild your home to its previous condition, even if the cost of doing so exceeds the stated limit.
• Property: High-value home insurance provides higher limits for items like cash, jewelry, art, antiques, or even business items located in the home. If you only have a standard policy, it is common for it to cost you an additional 10% to insure your personal property at the replacement cost, rather than actual cash value. And if your claim is based on the current cash value of your items, you will receive less for old items than you originally paid, due to depreciation. Most often, high-value home insurance insures your items at replacement cost, rather than current value, which will give you a greater amount.
• Liability:
• High-value policies often include higher personal liability limits, medical payments, and loss assessments. They also commonly cover costs if you need to defend against claims of defamation, slander, or libel.
• Additional living expenses: You will often enjoy much higher coverage limits for living expenses incurred while waiting for your home repairs, such as hotel stays, meals, or laundry services.

Some high-value home insurance policies also provide specialized coverages not often offered by standard policies. This includes things you may not think about if your home is damaged, such as the cost of replacing locks if your keys are stolen, identity theft protection, or the cost of replacing food that spoiled due to a power outage. The policy may also cover kidnap or ransom costs and legal defense fees.

Note: Having coverage for living expenses while your home is being repaired is often a major asset. Many luxury home policies cover the costs to maintain your previous comfort level. If your standard of living allows, you might even stay at a luxury hotel with all the amenities while taking the time to hire the right architects and builders to restore your home after an unfortunate incident.

Do I need high-value home insurance?

Not every home needs luxury home insurance. This type of coverage is specifically designed for homes that would cost a lot to rebuild or repair, or if the belongings inside are hard or impossible to replace.

High-value home insurance might be a good option for you if any of the following apply:

• Your home is valued at over $750,000
• Your home is a historic property
• Your home has old construction features not found in common styles or practices
• Your home has unique architectural features
• Your home uses hard-to-replace materials
• You own fine art, antiques, collections, jewelry, valuable wine, or other high-value items kept in the home that are priceless
• You have chosen luxury appliances or fittings that can’t be found in standard stores
• Interior and exterior design features are unique, such as luxury outdoor living spaces, guest houses, pool areas, custom landscaping, or specially designed features by an interior designer

How much does high-value home insurance cost?

Luxury home insurance will be more expensive than standard versions, due to increased coverage limits and enhanced personalized experience. High-value homeowners need to budget for higher premiums each year. In 2018 (the latest data from the Insurance Information Institute), homeowners in the United States paid an average of $1,249 annually for standard home insurance. You can be sure that a high-value policy will be significantly higher.

There are many ways to reduce the price you pay for insurance, regardless of the type you choose.

• Get multiple quotes: Shop around with major companies in your state for the best rate.
• Choose a high deductible: The deductible is the amount you pay out of pocket before your insurance coverage kicks in. Choosing to pay a larger amount out of pocket when filing a claim is a common trade-off to lower premiums.
• Bundle home and auto insurance: Purchasing both policies from the same company can save you 5% to 15% on premiums.
• Look for discounts: Some insurance companies offer discounts for retirees or for employees or members of certain organizations.

Takeaways

Home

High-value home insurance is a specialized type of homeowner’s insurance designed for homes valued at $750,000 or more. It provides higher coverage limits than standard policies, as well as additional types of coverage to meet the needs of luxury homeowners. This type of insurance can cost more than $1,200 annually, but you can reduce your costs by shopping around and looking for deals and discounts.

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Sources:

Harris Insurance. “High Value Homeowner Packages.” Accessed Sept. 9, 2021.

Travelers. “High Value Homes Comparison Guide,” Page 2. Accessed Sept. 12, 2021.

Insurance Information Institute. “How Much Homeowners Insurance Do I Need?” Accessed Sept. 12, 2021.

The Zebra. “High-Value Homeowners Insurance.” Accessed Sept. 12, 2021.

Insurance Information Institute. “Facts + Statistics: Homeowners and Renters Insurance.” Accessed Sept. 9, 2021.

Insurance Information Institute. “Twelve Ways to Lower Your Homeowners Insurance Costs.” Accessed Sept. 12, 2021.

Source: https://www.thebalancemoney.com/what-is-high-value-home-insurance-and-is-it-worth-it-4172828