High-Value Home Insurance: A Complete Guide

High-Value Home Insurance: A Complete Guide

When you have a high-value home, you want to make sure it is adequately covered by insurance. Those homes valued at $750,000 or more have greater insurance needs than the average home. If there is damage to the house, it will cost more for the structure to be brought back to its original state. If you have a high-value home, here are a few things to know about insuring it.

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What Is High-Value Insurance?

Luxury homes have higher valued policies than standard homes. These policies cover both the home and personal property at the replacement cost value. Along with that, coverage limits are often higher for high-value items housed in the structure. 

This type of insurance often features more coverage than a standard homeowners insurance policy. For example, options could include landscaping coverage, water backup coverage, business property coverage, and identity theft coverage. In many cases, these extra coverage options are included for free. 

Don’t forget about the policy perks with these plans. Some insurance companies will add special bonuses for their policyholders. Cash settlement options, free home appraisals, and deductible waivers are some of those extras you can expect with a high-value insurance policy. 

Related: Insurance 101: Actual Cash Value vs. Replacement Cost

Finally, these plans offer a dedicated customer service line to their policyholders. In many situations, the policyholder is paired with a personal representative or concierge to handle claims on their behalf. These representatives can find contractors, book hotel rooms for the duration of the repairs, and schedule a home appraisal.

What Is Considered a High-Value Home?

Most homes that have a property worth of $750,000 or more is considered a high-value home. Many homes fall into this group, including those with extraordinary architecture, heritage homes, and unique design elements. In most cases, these homes are known as estate properties or mansions. When it comes time to insure these properties, high-value insurance features a complete package of comprehensive coverage.

outside of a luxury home

What Is the Right Amount of Homeowners Insurance?

When looking for the right amount of high-value insurance, you need to base your decision on the home’s replacement cost value. For example, if your roof is damaged on a high-value home, you need the right amount of coverage to restore it. If it costs about $2 million to bring your home back to its original condition, then you need at least $2 million in home insurance. However, if there is damage to your home, your personal belongings have also been damaged or destroyed. In that case, you also need personal property insurance. These policies need to cover all your personal belongings, such as furniture, appliances, decor, and clothing. You can estimate the cost of your belongings with a home inventory. That way, you can get the total value of your lost items. You might want to consider liability insurance. If someone is hurt on your property, this policy can protect your finances from legal lawsuits. 

How Do You Insure High-Value Items?

Whether you have high-value insurance or not, there could be specific exclusions to your policy. Some insurance companies will exclude those high-value items with a limit on how much you can collect on them. You can often purchase a rider to add to your policy to cover those high-value items.

Before you do that, you will need to determine your coverage amounts. Many insurance companies have an “average coverage amount” for your home. The cost of your home, number of rooms, and location can all play a role in insurance coverage. If the high-value items are written off, your insurance company will reimburse you for those items. Some homeowners do not have enough coverage to protect those valuable items. A few insurance companies will only cover the current value of the items and not the total replacement value.

Related: Roof Storm Damage? 7 Signs You Need a Replacement 

If you want the right amount of coverage, you need to document all of your high-value items. You can even grab your smartphone’s camera and make a video of all these items. However, it might be a better item for high-value belongings to open a spreadsheet and document the make, model, purchase price, serial number, and the estimated value of these items. 

Once you have completed that, see if these items can be included in your high-value home insurance policy. In many instances, you might need to purchase a rider to cover those replacement costs. A rider is inexpensive, but it can give you some peace of mind if the unthinkable happens in your home, like extensive roof damage. How do you insure valuable items? It only takes a few steps to protect those high-value items in your home. 

What Is the 80% Rule for Insurance?

There is an unwritten rule that insurance companies don’t provide complete coverage unless the policy equals about 80% of the home’s replacement value total. If your home is only covered for less than that percentage of the replacement value, the insurance company might only pay the difference. For that reason, you want to make sure there is enough coverage to protect your home. 

Do I Really Need High-Value Home Insurance?

This answer depends on whether you own the home or not. If the home is 100% yours, then there is no need for insurance. However, if there is any damage to the structure, you must cover all the costs. Some home repairs, like roofing jobs, are costly, and you want the right coverage to restore your structure. For those with a mortgage, your lender will require you to have homeowners insurance to cover the property. Since a high-value home costs more than the typical home, repairs costs could be astronomical without insurance. It is a good idea to have insurance for your home. 

white and brown concrete building

How Much Is House Insurance a Month?

The amount that you pay for every month depends on the value of your home. A typical home might only spend a few hundred a month for coverage, while a high-value home insurance policy could see rates into the thousands per year. 

Related: What to Do if Your Roof Insurance Claim is Denied 

High-value homeowners should think about purchasing special insurance for these buildings. With this type of insurance, you can have some peace of mind that your home and belongings will be protected in the event of a disaster. 

Are you thinking about installing a new roof for your high-value home? Talk to the professional roofing team at Advanced Consulting

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