The standard home insurance policy that many homeowners use offers excellent coverage for damage to the property’s physical structures. It protects homeowners from personal liability for injuries suffered in the home. It will also pay for additional living expenses if the owners can’t live in their home because it is damaged and undergoing repair.
For most people, regular home insurance is all the insurance they will ever need. But this conventional home insurance does not cover the insurance needs of every type of home. Taylor St. Management warns that if the value of your home is above a certain amount, regular insurance may not be enough for you. You will need a high-value home insurance policy that offers more benefits than basic home insurance.
What is a high-value home insurance policy?
A high-value home insurance policy covers expensive homes. An expensive home, in this sense, is a home valued above $750,000. Although some policies set the eligibility criteria at $1 million or more, most policies set the cut-off point at $750,000. How does a high-value insurance policy work, and should you buy one?
High-value home insurance is for high-net-worth individuals who own luxury homes. But the policy does not use the home’s purchase price or the value of the land it sits on as the criterion for valuing the property. Instead, it determines the value of the home by its replacement cost. That is, the amount it would take to rebuild the house to its original condition.
With high-value home insurance, owners of luxury homes get property coverage limits which are not possible with standard home insurance. For instance, regular home insurance is often inadequate for covering expensive items like antiques, jewelry, and art. But a high-value policy offers better protection for these assets, as well as for the property owner.
What’s included in a high-value home insurance policy?
The chief benefit of buying high-value home insurance is the expanded coverage limit, which applies to the entire property and individual items in the home. Although you can usually purchase endorsements for expensive gadgets along with your regular home insurance, high-value home insurance does not need special endorsements to include higher coverage limits.
Here are some of the things you can expect from a high-value home insurance policy.
1. Superior dwelling coverage
High-value home insurance goes well beyond what is available with a standard policy. If your home is damaged, it can reimburse you for house repairs with amounts above what is in the policy. It is helpful when the cost of labor and building materials increases, such as after a natural disaster or any sudden and unexpected water damage due to a plumbing malfunction or broken pipe.
2. Better contents coverage
Luxury homes have expensive personal items, but getting adequate insurance is a big issue for the owners of such properties. High-value home insurance provides superior content coverage; with blanket coverage of up to $15,000 or a limit of $10,000 for individual items. The policy will often include up to $25,000 coverage for breakage of antiques and other valuables.
3. Cash settlement or cash-out option
The policy will offer you a “cash-out” option if you suffer total loss because of a wildfire. A cash settlement option means you do not have to rebuild the house at all. You can take the money and build elsewhere, or even use it for something entirely different.
4. Better liability coverage
There is the constant threat of crucial losses due to lawsuits for people with significant assets. High-value home insurance makes provision for this by letting you go beyond the coverage limit when paying for legal defense costs and legal settlements. High-value home insurance also provides personal injury coverage that is usually only available through an umbrella policy.
5. Additional living expenses
Although additional living expenses are available with regular home insurance, this feature works differently under a high-value home insurance policy. Unlike basic home insurance, you do not have to book the hotel room yourself or file for reimbursement. That’s because the insurer will book and pay for it directly.
6. Replacement cost
With standard home insurance, there is an option to choose between “actual cash value” and “replacement cost.” A policy that offers replacement cost is better, and high-value home insurance typically uses replacement cost as the default option. The insurer will pay you enough money to buy a new item to replace the damaged one.
7. Replacement for pairs and sets
Replacing one item in a pair or set is hard because it is often difficult to find an exact replacement for the damaged piece. But this is not a problem with high-value home insurance, since the policy will reimburse you for the entire set or pair.
Should you consider high-value home insurance?
If your home’s value is above $750,000, and you worry about the limitations of your conventional home insurance policy, the answer is definitely YES. You can find more information about high-value home insurance here.
