High-Value Home Insurance: When Do You Need It?
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A standard homeowners insurance policy will only cover so much. If your home is significantly more valuable than the typical American home, or would be particularly costly to replace, you may need to consider a high-value home insurance policy.
While these policies tend to be more expensive, they offer higher coverage limits than you’ll find in a standard plan, ensuring you’re protected if disaster strikes.
Here’s what you need to know about high-value home insurance:
What is a high-value home?
While “high-value home” is not a technical term, the insurance industry standard for determining a high-value home insurance policy is generally $750,000. That means you may need to buy a high-value home insurance plan if your home’s worth reaches $750,000 or above.
How does high-value home insurance work?
A high-value homeowners policy functions similar to a typical homeowners insurance plan, but with higher coverage limits and potential add-ons that don’t usually come standard.
One of the primary features of a homeowners insurance policy is dwelling coverage, or protection for your house. If a fire, storm, or another incident damages the structure of your home, your dwelling coverage helps cover the cost to repair or rebuild it.
A high-value home insurance policy has a larger-than-normal dwelling coverage limit — enough to cover the cost of rebuilding your high-value home.
Your policy may also include extended replacement cost coverage or guaranteed replacement cost coverage, which covers you if the cost to rebuild your home ends up exceeding your dwelling coverage limit. This feature is an optional add-on to most standard homeowners insurance policies.
What does high-value home insurance cover?
High-value home insurance covers all the things a standard home insurance policy does, but generally at higher dollar amounts. These include:
- The house itself: This is the dwelling coverage we discussed earlier. Your dwelling coverage limit should be at least 80% of the cost to rebuild your home, but you should consider buying enough to cover the entire cost.
- Your belongings: Homeowners insurance policies also help cover the cost of damage to the things you own inside your home, like furniture, electronics and clothes. Many standard homeowners insurance policies cover the “actual cash value” of your personal property, which takes into account the age and condition of your belongings minus depreciation. A high-value home insurance policy will likely include replacement cost coverage instead. With this coverage, your insurance company pays out the amount needed to buy new belongings without deducting for depreciation.
- Your valuables: High-value home insurance policies are more likely to include coverage for valuables like art, jewelry, collections, furs, antiques, wines and other pieces. Standard policies generally don’t cover these items, though you can buy coverage as an optional add-on.
- Liability: Standard homeowners insurance policies include liability coverage, or protection against legal damages if you’re found responsible for injury to someone else on your property. A high-value home insurance policy will have a higher coverage limit for liability than a typical plan.
- Your vacation home: A high-value home insurance policy may also cover second homes or vacation homes you own as well.
|Coverage||Standard homeowners insurance policy||High-value home insurance policy|
|Damage to your house||Yes||Yes, but at a higher amount|
|Personal property||Yes||Yes, but to a higher amount|
|Valuables and art||Limited||Yes|
Additional coverage options
In addition, you may be able to add other coverage options to your high-value plan. These options include:
- Umbrella coverage: These insurance policies cover your legal liability above and beyond what your homeowners insurance will cover. This can protect you if you’re found responsible in a civil case. An umbrella policy may also protect you in more circumstances than a standard home insurance policy would, such as if you’re accused of libel, slander, false arrest, or invasion of privacy.
- Kidnap and ransom insurance: If you frequently travel overseas, or have a high-profile job, you may be concerned about the risk of kidnapping. These policies may cover money paid to kidnappers or ransomers, and other expenses related to being a victim of these crimes.
- Liability insurance for domestic workers: If you have maids, groundskeepers, chefs or other domestic workers in your home, this coverage can help protect you if they are injured while on your property.
Things to consider when purchasing high-value homeowners insurance
High-value home insurance policies tend to offer more flexible and comprehensive coverage than standard homeowners policies. As you buy your policy, pay close attention to the following:
- Coverage amounts: While the dwelling coverage limit is important, also keep in mind your other coverage limits. In a standard homeowners insurance policy, your coverage limits on your personal belongings, additional living expenses, and other structures are typically capped at a percentage of your dwelling coverage limit. With a high-value policy, you can set your coverage limits exactly where you need them.
- Premiums: High-value home insurance policies are more expensive than standard plans. As you buy a policy, pay close attention when comparing premiums between different insurance companies. Make sure the coverages are similar and that each company has the type of coverage you need.
- How claims are paid: High-value home insurance policies may be more likely to include replacement cost coverage rather than actual cash value coverage, but double-check this before buying.
- Customer service: Make sure you’re comfortable with the customer service you receive when shopping for a high-value home insurance policy. Thoroughly describe your financial situation to the insurance company along with the specifics of everything that needs to be covered. If you’re unsatisfied with the service, look elsewhere.
- Perks: High-value home insurance policies may come with special perks that you can’t find with a standard policy. These may include deductible waivers — where the insurance company won’t require you to pay out of pocket if your losses exceed a certain amount — or personal consultations to help you minimize risk.
How much insurance coverage do I need for my high-value home?
How much coverage you need depends primarily on your home’s value.
Most mortgage lenders require you to carry coverage equal to or greater than the amount of your loan. You may have taken out a jumbo loan to buy your high-value home — these lenders will have the same requirements. Some insurers may require you to buy enough insurance to cover 80% of the cost of rebuilding your home, while others may require 100% coverage.
As you shop for a high-value home insurance policy, also carefully consider the valuables you have, legal liability risks you face, and any other circumstances that could put you in financial jeopardy. Make sure your policy provides adequate coverage to mitigate these risks.
Cost of high-value homeowners insurance
The more insurance coverage you have, the higher your premiums tend to be. So your policy’s cost is largely driven by the actual value of your home. The more expensive the home, the more expensive the insurance. Particularly large or expensive collections of valuables can lead to higher premiums as well.
Your cost may also vary based on your location, the age of your home, whether you live in a flood- or fire-prone area, and your credit score. Be sure to get quotes from multiple home insurance companies before settling on a policy.
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