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

High-value home insurance provides enough coverage to repair or rebuild homes of significant value. This type of policy offers higher coverage limits than many standard home insurance policies, and sometimes includes additional benefits that you wouldn’t get elsewhere. In short, high-value home insurance may offer higher coverage limits, broader coverage, more flexible terms, and other perks. 

What is high-value home insurance?

High-value home insurance refers to policies specifically designed to cover homes with a replacement cost of $750,000 or more, although the exact dollar amount varies by company. There are insurance companies that specialize in high-value home insurance, but some standard insurers also offer it. 

The types of coverage provided by high-value home insurance include: 

• Dwelling coverage (Coverage A): Dwelling coverage covers damage to the physical structure of your home and attached structures like a garage. High-value home insurance policies typically provide dwelling coverage limits of $750,000 and up. 

• Other structures coverage (Coverage B): This portion of a policy covers losses that affect unattached structures on your property, which may include driveways, standalone garages, greenhouses, fences, and sheds.

• Personal property coverage (Coverage C): This helps pay to repair or replace your belongings in the event of claimable damage. In a standard policy, your personal property coverage limit could be 50% of your dwelling policy limit. But high-value home insurance often includes a higher coverage limit. Plus, the payout you receive for lost or damaged personal property with a standard policy typically reflects the depreciated value of your items (called actual cash value). With a high-value home insurance policy, you could be paid out today’s market value for your damaged belongings (called replacement cost value).

• Loss of use (Coverage D): If a covered event makes your home unlivable, this coverage helps with the cost of temporary housing like a hotel. It also covers extra living expenses, such as meals out.

• Personal liability coverage (Coverage E): The liability coverage portion of a home insurance policy helps pay for bodily injury to others or damage to someone else’s property if you are responsible. It can also help cover legal expenses if you are sued by a third party. High-value home insurance may offer a higher liability coverage limit than standard policies. 

• Medical payments coverage (Coverage F): This helps pay for medical bills if a guest gets hurt on your property, regardless of who is at fault. It also applies to others’ injuries that you, your household members, or your animals cause off-premises.  

Unique features of high-value policies

The biggest difference between high-value home insurance and standard home insurance is high-value home insurance typically comes with elevated coverage limits. Depending on the insurer, high-value home insurance may also provide additional benefits and unique perks, including: 

• All-risk coverage that protects your home, other structures, and personal belongings against all causes of loss (called perils) except for those that are specifically excluded by the policy. Standard policies come with certain limitations, particularly when it comes to personal property. 

• Home appraisal services to make sure that your insurance coverage limits are sufficient.

• Identity theft coverage to protect you from losses if your identity is stolen. This might also help cover the costs of legal expenses or professional services you retain to help recover your stolen identity. 

• Cash-out settlements that allow you to accept a lump sum payment (typically based on the depreciated value — called actual cash value — of damaged property), minus your deductible. 

• Large loss deductible waivers that will waive your deductible if you experience a loss that exceeds a specific threshold, such as $50,000. These waivers only apply in specific scenarios. 

• Risk consultations to help you identify and mitigate hazards that could pose a threat to your home. One example is storm-proofing to reduce damage during severe weather. 

• Home systems protection that covers losses caused by mechanical or electrical system failures, beyond what a standard home insurance policy would cover. 

• Kidnapping, ransom, or extortion coverage to help cover losses stemming from related incidents. Coverage may also include crisis management services. 

• Vacation and second home coverage that offers you the ability to add coverage for additional properties you own, even in other countries, to your primary high-value home insurance policy. 

Who needs this type of coverage?

You may need high-value home insurance if your home has a replacement value of $750,000 or more. Owners of custom-built homes, homes with historical value, or homes with other special qualities might also qualify for high-value home insurance.  

Remember, you want to insure your home based on its replacement cost, which is the amount to fully rebuild after a total loss. This is not the same as your home’s market value, which includes the land it sits on and is the amount you could potentially sell your home for.

How to choose a high-value insurer

Choosing the right high-value home insurance policy involves shopping around with various companies, since policies differ between insurers. Here’s how to go about it: 

• Figure out how much coverage you need. Don’t know your home’s replacement cost? An insurance agent can help you calculate this figure, or you can use a replacement cost estimator to get a ballpark idea. A contractor who can evaluate your home’s design and building materials might also be able to give you a more accurate number. 

• Look at special benefits and endorsements. Check out the special benefits, endorsements, and coverage options each insurer offers – including identity theft coverage, cash settlements, deductible waivers for large losses, and more. 

• Get quotes from multiple insurers. Request a quote for your home from a few of the companies you like best. Try to specify the same coverage types, policy limits, and deductibles each time so you can accurately compare the quotes. 

Frequently asked questions about high-value home insurance

What is considered high-value home insurance? 

A high-value home insurance policy is designed for luxury homes that are generally worth more than $750,000, due to the size of the home, its location, or desirable features, such as a pool, home gym, or tennis court.

What differentiates high-value home insurance from a standard home insurance policy is the larger amount of coverage, though some high-value home policies may also include perks such as:

• Home computer coverage

• Identity fraud expense coverage

• Loss assessment coverage

• Ordinance or law coverage

• Water backup and sump overflow coverage

• Data replacement coverage

• Kidnap expense coverage

• Mine subsidence coverage

High-value coverage limits and perks can vary based on your insurer, state, and specific policy details.

What does high-value home insurance not cover?

Like a standard policy, a high-value home insurance policy doesn’t cover everything. For instance, dwelling coverage usually specifies the following exclusions:

• Floods

• Earthquakes

• Pest infestations

• Known neglect

• General wear and tear

Similarly, liability insurance may not cover you if you intentionally hurt someone, and standard personal property insurance doesn’t cover your car. That said, you may be able to purchase additional policies or endorsements to address any gaps in coverage.

How much high-value home insurance coverage do you need?

To determine how much high-value home insurance coverage you need, you’ll need to carefully consider the worth of your assets. For instance:

• Don’t think of how much you would list your house for if you were to sell. Instead, calculate the cost to rebuild your home exactly as it is now, including material costs and labor.

• Calculate the cost to replace your possessions. It may be worth getting some items, such as jewelry and artwork, appraised.

• Consider the unique risks your home poses. For instance, having a large pool or pond may require higher amounts of liability coverage. If you regularly entertain or have staff working in your home, your chances of liability claims go up.

• Factor in the costs you’d incur if you lost use of your home. For instance, if you have a large family, how much will temporary lodging cost? How much would storage units be should you need to remove your personal belongings?

What additional coverages should a high-value homeowner consider?

For the highest level of protection, consider these additional coverages for your high-value home insurance policy:

• Personal property replacement cost: Most standard homeowners insurance policies offer actual cash value for personal property, meaning your items are insured up to their depreciated value, not the cost to replace them. If it is not automatically included in your high-value policy, you can upgrade to personal property replacement cost coverage to ensure you have the exact amount you need to replace every covered item in your home.

• Extended replacement cost coverage: Dwelling coverage provides the cash you need to rebuild your home, up to your covered limit. But as construction labor and material prices continue to rise, an extended replacement cost endorsement can help you inflation-proof your policy by increasing your coverage limit.

• Flood, hurricane, and sewer backup coverage: Standard homeo insurance policies typically exclude coverage for flood damage, hurricane damage, and sewer backup damage, among others. However, you can add these separate coverages to your core policy for more robust coverage.