High Value Home Insurance

High Value Home Insurance vs Regular Home Insurance – What’s the Difference?

What Is a High-Value Home Insurance Policy?

High-value home insurance is a specialized homeowner insurance product, specifically designed for homes with a high cost to rebuild.

Typically, a high-value home insurance policy is offered only to homeowners with a home valued above $750,000, with some insurers requiring the home to be valued at over $1 million dollars.

High net worth families with high value homes may not be adequately covered by a standard homeowner insurance policy as the standard policy does not account for their unique needs. As an example, a standard home insurance policy may not provide enough coverage for art, jewelry, and antiques. While it is possible to add policy endorsements to fill gaps in the standard coverage, in the end the high value homeowner risks being significantly underinsured.

In other cases, the less flexible standard home insurance policy may provide too much coverage, as many coverages are calculated as a percentage of the cost to rebuild. This excess coverage results in higher premiums that would be better served filling coverage gaps on other parts of the policy.

While most of the top insurance companies offer a standard homeowners insurance product, only a select few insurers offer a high value home insurance policy specifically designed for the unique needs of high-net-worth families:

• AIG Private Client
• Chubb
• Pure Insurance
• The Cincinnati Insurance Companies
• Openly Insurance
• National General
• Vault

How High-Value Home Insurance Works

Contractually, a high value home insurance policy works in the same way as a standard home insurance policy. In the end, you are still paying premium to insure your home, its contents, and your own personal liability.

Think of a high value homeowner insurance policy as being similar to a standard homeowner insurance policy except that you can choose from an array of extra features and are able to customize the coverages to fit your unique needs. This is often the best homeowner insurance product for those with homes that would cost more than $1 million dollars to rebuild.

Will Standard Home Insurance Be Enough?

To be certain that any home insurance policy will be enough, it is recommended to work with a state licensed insurance advisor. In the event of a total loss on a standard insurance policy, the payout will be based on the policy limit. If the cost to rebuild exceeds the policy limit, the standard home insurance policy would not be enough. It is critical to have the correct policy limits in place as costs to rebuild can be dynamic.

Unlike the standard policy, a high value home insurance policy offers Guaranteed Replacement Cost. Therefore, the high value home insurance policy guarantees that your home will be fully rebuilt in the event of a total loss, regardless of if the cost to rebuild exceeds your policy limit. In that same total loss scenario, a standard home insurance policy would only pay up to your policy limit.

How Does High-Value Home Insurance Differ?

While there are many features, the ability to customize your coverage limits is the key reason to select a high value home insurance policy for your home. With a standard home insurance policy, coverage limits such as personal property and other structures are fixed at a percentage of your dwelling limit. With a high value home insurance policy, you can customize coverage limits to fit your needs.

Let’s use a home with a dwelling limit of $8 million dollars as an example. A standard home insurance policy would require your coverage for personal property to be 50% of $8 million dollars, or $4,000,000.

With a high value home insurance policy, you can customize your personal property limit down to as low as 20% of your dwelling coverage. In doing so, you would reduce the coverage you’re paying on personal property by $2,400,000 which could save you thousands of dollars.

Beyond the customizable coverage, a high value home insurance policy also features Guaranteed Replacement Cost. A high value home insurance policy guarantees that your home will be fully rebuilt in the event of a total loss, regardless of if the cost to rebuild exceeds your policy limit.

Another feature of the high value home insurance policy is called the Cash Settlement Option. When a total loss occurs, the high value home insurance policy offers the ability to take a cash settlement at full replacement cost if you did not wish to rebuild the home. Without a high value home insurance policy, that cash settlement would be “depreciated” and therefore not a viable option for most homeowners.

The high value homeowner insurance policy also comes with broader liability coverage including defamation, libel, or slander. Finally, a high value home insurance policy offers a Deductible Waiver meaning your standard deductible will be waived if you have a claim that is over $50,000 dollars. This encourages you to select a high deductible which will lower the premium and save you money.

How Much Does High-Value Home Insurance Cost?

It goes without saying the cost of high value home insurance varies greatly. Not only do insurance rates for high end homes vary greatly throughout the nation, but also each high-net-worth family has their own unique needs requiring a customized high value home insurance package.

It can also be true that the cost of a high value home insurance policy for a high-end home will be higher than the cost of a standard home insurance policy for a less valuable home. The higher cost is not only because the insured value of the home is higher, but often also is the result of location, construction type, style of home, safety features, year built and a variety of additional factors.

While the costs vary, we can still offer an illustration of coverage costs using the example of a $5 million New York home on Long Island. A reasonable estimate for the example is $0.25 per $100 of insured value.

Let’s assume the $5 million home has another $1 million of “other structures” on the property and that the personal property is valued at 50% of the home’s value, $2.5 million. So, the $5 million Long Island home is insured in total for $8.5 million.

With $0.25 per $100 of coverage, this $5 million home would have an estimated annual premium of $21,250.

Rates do vary greatly based on many individual factors. Some of the most impactful are:

• Location of home
• Construction type of home
• The cost to reconstruct your home
• Year built
• Your credit score or insurance score
• Your loss history
• Packaged home policy or standalone home policy
• Deductible

Do I Need High-Value Home Insurance?

Not every home requires a high value home insurance policy. It is very much dependent on the unique needs of the homeowner. A good rule of thumb is that if your home is valued over $1 million, you should at least consult a licensed insurance advisor to discuss your current coverage.

Other reasons to consider a high value home insurance policy designed specifically for high value homeowners:

• Your home has unique architectural features
• Your home uses materials that are hard to replace
• Your home is a heritage home
• Your home has older construction features not found in common methods or practices
• You own expensive or priceless fine art, rugs, collections, jewelry, wine, or other items that are kept at home
• You chose high-end appliances or fixtures that cannot be found at standard stores
• The interior and exterior design features are unique, such as luxurious outdoor living areas, guest houses, swimming pool areas, custom landscaping, or bespoke features that were created by an interior designer

You can also choose customized coverage or pair your home coverage with specialized coverage to protect your unique lifestyle.

• Protection for vacation homes or second homes
• Car insurance for luxury autos, collections, and exotics
• Protect against identity theft
• Ransom insurance
• Liability insurance for household employees
• Coverage for yachts, boats, and watercraft
• Cyber liability insurance
• Liability coverage for board members and volunteer activity

Where Can You Get a High Value Homeowner Insurance Policy?

High Value Homeowner Insurance policies are exclusively customized and sold via independent insurance agents. A limited number of premier insurance companies offer these products tailored to the unique needs of high value homeowners.  Chubb Insurance, PURE Insurance, Cincinnati Insurance, AIG Private Client, Openly & Vault Insurance are all notable insurance companies with products designed for high value homes.

If your home is valued over $1 million dollars, we recommended speaking with our team of state-licensed insurance advisors to learn more about custom high value home insurance packages.  With Coastal Insurance Solutions, our team of advisors will partner with you to tailor a package to your unique needs and compare quotes from the finest high value home insurance companies.