Who Needs High-Value Home Insurance?

Thu Jul 5 2018

If you own a valuable home, your homeowners insurance may need to do some extra work. That’s what high-value home insurance is for.

What Is High-Value Home Insurance?

High-value home insurance is a type of homeowners coverage designed for those with houses worth more than $750,000. While it’s like standard homeowners insurance in many ways, high-value coverage also offers unique benefits to policyholders, largely because those with higher-value homes tend to have slightly different needs.

Before we get into the nitty-gritty, it’s worth emphasizing that the “high-value” here applies to the home, not the insurance. So if you have a “normal” value home in a risky area, meaning you need higher levels of insurance coverage, you’ll still want to get a basic homeowners insurance policy.

You’ll only need a high-value home insurance policy if your home’s value exceeds the $750,000 mark.

Now here’s a look at how high-value homeowners insurance is different from an average policy.

More Extensive Property Coverage

In a standard homeowners insurance policy, property like furniture and clothing is typically covered. But if you’ve got high-value items like jewelry, art, furs, or guns, you’ll probably have to cover them separately. That process is called “scheduling” and involves adding an “endorsement” to your original policy.

High-value home coverage, though, usually includes protection for high-value items. If you assume people with more expensive homes are more likely to have expensive possessions, it makes sense to include coverage for them in the policy.

Additional Structures Coverage

Another neat feature of high-value home insurance: you can probably include your guest house, pool house, pool, and croquet court in your policy. Why not? Again: people who can afford higher-value homes are more likely to have these additional structures, so it’s logical that policies designed for this type of dwelling would be built to accommodate them.

Unlimited Loss of Use Coverage

Standard homeowners insurance offers benefits you can use to stay in a hotel or another location if your home becomes uninhabitable because of a covered type of property damage. These benefits are called “loss of use coverage” and may also include money to eat at restaurants, wash your clothes at a laundromat, and whatever else you need to approximate a normal life outside your home.

In high-value home insurance, the loss of use benefits get an upgrade. Homeowners with one of these policies may effectively have unlimited loss-of-use funds. The philosophy here is that high-value homeowners are used to an elevated standard of living, so to replicate that, they’ll need enough money to stay in a nice place and buy high-quality food.

Identity Theft Coverage

While identity theft coverage isn’t standard on all high-value home insurance policies, it’s not uncommon, either. This can be a nice supplement for those with a higher net worth because criminals have an obvious incentive to steal their identities and benefit from their assets.

Cash Benefits for Extensive Damage

As with any type of insurance, not all high-value policies are the same. But we’ve seen that some high-value policies offer cash benefits for extensive damage if the homeowner decides not to rebuild.

For example, imagine your high-value home is more or less destroyed by fire. Your high-value policy would likely pay you enough money to build a home of a similar value on the same property. But if you decide you don’t want to do that – maybe because you’re afraid the area is too risky – some policies will pay you in cash what rebuilding would have cost.

Warning: Many High-Value Homes Are Underinsured

One last thing to consider: many high-value homes are underinsured. This is bad news, as it means the owners of these homes stand to lose a lot in the event of damage. We described a lot of neat benefits in this post, but keep in mind that these benefits are only available to homeowners who are adequately insured for the value of their home and property.

So if you’ve got a house worth more than $750,000 and aren’t sure whether you have a high-value policy, now may be a good time to call your agent and see whether you’re missing out on essential protections.