What is high-value home insurance and who needs it?

A standard homeowners insurance policy is designed to protect an average-priced home. If you own a luxury home or condo, your home and everything inside could be worth more than the coverage limit on a standard policy. That’s where high-value home insurance comes in.

High-value home insurance can provide more coverage and other unique features for expensive properties. Let’s dive into what high-value home insurance is and what it covers.

• What is a high-value home?
• How high-value home insurance works
• What does high-value home insurance cover?
• What to consider when buying high-value homeowners insurance
• Estimating how much high-value insurance coverage you need
• How much you’ll pay for high-value home insurance

What is a high-value home?

In general, a high-value home is typically defined as one costing $750,000 or more to rebuild. Insurance companies offer more coverage for high-value homes because of the higher replacement cost. And since owners of expensive homes may have unique possessions and liability risks, high-value insurance policies tend to have extra features and services to help protect other assets.

How high-value home insurance works

Some insurance companies offer standard home insurance policies with increased coverage limits for high-end real estate. However, policies designed specifically for luxury homes may come with higher coverage limits, more personal liability coverage, and broader coverage for your possessions beyond what’s typically available in a standard policy.

Say you’ve installed a wine cellar, invested in custom furniture, or own rare jewelry. High-value insurance could provide personalized protection tailored to your lifestyle. If you need to submit a large claim after your home gets burglarized or damaged by a fire, this policy will help reduce out-of-pocket costs.

Besides the coverage aspect, high-value home insurance can come with other features, like deductible waivers on claims over a certain amount and a cash settlement option. With a cash settlement, you can choose to pocket money instead of rebuilding if your home is damaged beyond repair.

What does high-value home insurance cover?

Since high-value home insurance is a highly customizable product, coverage can vary by homeowner and insurance provider.

Here’s an overview of coverage and feature options that may come with this type of policy:

• Dwelling and other structures coverage — Like a standard homeowners insurance policy, high-value insurance covers your home’s structure, but with more flexible coverage limits. Besides the home itself, high-value insurance can cover landscaping and provide better coverage for garages or sheds.
• Personal property coverage — High-value home insurance may cover possessions not typically protected, such as jewelry, wine, fine art, fragile items, and more. If an item gets damaged, the insurer may also pay to replace it without taking depreciation into account.
• Personal liability coverage — Personal liability covers you if you’re at fault for someone’s injury or property damage. Additionally, liability coverage may provide protection against defamation, libel, and slander claims.
• Sewer line backup coverage — Standard policies typically don’t cover damage if a sewer line or drain gets backed up, but luxury home insurance from providers like Nationwide and PURE Insurance does cover it.
• Guaranteed replacement cost coverage — If your home is damaged, this insurance can pay to rebuild your home with materials of the same quality, even if the cost is higher than the coverage limit.
• Cash settlement coverage — Homeowners can choose to get a cash settlement if a home is a total loss.
• Deductible waivers — The insurer may waive your deductible when damage exceeds a certain amount.
• Equipment breakdown coverage — Your insurance may provide coverage for appliances and other equipment when it breaks down.
• Identity theft support — Some insurers provide identity and reputation theft assistance.
• Personalized risk analysis and loss prevention — Insurers may provide risk assessments and other perks to help prevent future losses after a claim. They may also offer wildfire, water damage, and leak protection services.

Let’s take a closer look at the differences between high-value home insurance and standard home insurance.

What to consider when buying high-value homeowners insurance

Shopping for high-value home insurance is a lot like looking for standard insurance. However, in complex scenarios where you have a historic home, luxury real estate in a natural-disaster-prone area, or multiple homes across state lines, working as a private client with an insurance company could provide more one-on-one attention and service.

When shopping for high-value homeowners insurance, keep these factors in mind:

• Coverage limit — Your coverage limit is the maximum amount that the insurer will pay for the damage in a covered event, such as a fire or burglary. You can make adjustments to this limit as necessary, and some high-value home policies may pay out more than the covered amount for rebuilds.
• Deductible — A deductible is the amount you pay before insurance steps in to cover the costs after you file a claim.
• Premium — The premium is the amount you pay for insurance. Generally, the more coverage you have and the lower your deductible, the higher the premium.
• Customer service — Customer support for high-value homeowners insurance can go well beyond that of a typical homeowners insurance policy, with dedicated agents one call away. Inquiring about the claims process and customer service experience can help you find an insurance company that best suits your lifestyle.

Estimating how much high-value insurance coverage you need

In general, your home insurance policy should provide enough coverage to rebuild your home if it’s a total loss. Keep in mind that the cost to rebuild may not necessarily be how much you paid for it a decade ago or how much the market says it’s currently worth, so you might have to do some research on building costs to ensure you’re adequately covered.

Another factor to consider when shopping for insurance is your personal property. A standard insurance policy might offer contents coverage (insurance for your personal belongings) that’s just 50% to 70% of your dwelling coverage. This may not be enough if you have collectibles, art, china, jewelry, and other valuables. Do an inventory to determine how much your belongings are worth, and then speak with your insurance agent to design a policy that provides you with appropriate protection.

Lastly, assess your liability risk. Remember that you could be held responsible if someone tumbles down your stairs, gets bitten by your dog, or slips on the sidewalk delivering your mail. A standard homeowners insurance policy could provide as little as $100,000 in coverage. Upping the personal liability insurance with an umbrella policy, or additional coverage, to $5 million could be worth considering to protect your assets if the unexpected happens.

How much you’ll pay for high-value home insurance

The cost of high-value homeowners insurance depends on the coverage amount, deductible, and any potential add-ons you might have. Generally, the higher your deductible and the lower your coverage, the more affordable the premium will be. But going the low-cost route could leave more of the financial burden on you if there’s an event that causes damage to your home or property.

Including add-ons, such as an umbrella policy, will cost you more. But consider that you also have more to lose when you have a luxury home and significant wealth. Shopping around to compare options can help you find a policy that sufficiently covers your needs at the best price.