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If you require more protection for your high-value home than a standard homeowners policy offers, there are options available that can help you safeguard your property and your finances.
High-value home insurance is designed to fill coverage gaps you may encounter when insuring a house or condo that would be particularly expensive ($750,000 to $1 million or more) to rebuild.
Because these “luxury” home policies typically provide much higher coverage limits than standard policies, you can customize your insurance to better fit your needs.
Read on for a look at what a high-value home insurance policy can offer.
Key Points
• High-value home insurance and standard homeowners insurance can differ significantly when it comes to coverage limits and how reimbursements are calculated and paid.
• A home that would cost $750,000 to $1 million or more to rebuild may be a good candidate for high-value homeowners insurance.
• Not all insurance companies offer high-value homeowners policies. But you may be able to customize your coverage with add-ons (sometimes called endorsements or riders), or by pairing other types of insurance with your homeowners policy.
• Extra coverage can mean extra costs. To get the most bang for your buck, it can be helpful to compare quotes and options from different companies.
What Is a High-Value Home?
Insurance companies may use different specifications to determine whether a home qualifies as “high-value.” Generally, the home would have to cost $750,000 to $1 million or more to replace. But that amount could vary depending on other factors, including location, square footage, and whether the home has some unusual design features or uses high-end building materials.
A historic or architecturally significant home also might be a good fit for high-value house insurance.
Recommended: Homeowners Insurance Definitions
What Is High-Value Home Insurance?
High-value home insurance provides extra protection—including higher coverage limits and more flexibility when it comes to coverage options—than a standard homeowners policy. This type of insurance can help you cover all the costs of rebuilding your high-end home without settling for lower-grade materials or paying high out-of-pocket costs. You may also want to consider this added coverage if you keep fine art, jewelry, antiques or other expensive items in your home.
Not all insurance companies offer a specific high-value insurance policy, but you may be able to customize a standard homeowners policy with higher dwelling, liability, and personal property limits.
Key Features of High-Value Home Insurance
High-value insurance covers the same categories as standard homeowners insurance covers, but with added protection for the homeowners’ individual needs. Benefits may vary by company, but key features may include:
Guaranteed Rebuilding Coverage
Some insurers may offer extended or guaranteed replacement cost coverage, which will reimburse you for rebuilding costs that go above your dwelling coverage limit. This addition can help protect your finances when labor and material prices rise or if there are expensive delays in rebuilding. And it can help you ensure your home is rebuilt to its original quality and character.
Cash Settlement Option
This option allows homeowners to take a cash settlement from the insurer if they decide not to rebuild or repair their home after a covered total loss (such as a fire, storm, or other insured peril). A high-value policy may provide a full cash payout based on an agreed-upon replacement value rather than reducing the payout to a lower market value or heavily depreciated actual cash value (ACV).
Higher Liability Limits
If you have significant assets to protect, or if you have a high profile that might expose you to more lawsuits or larger liability claims, adding higher limits for personal liability coverage could help you shield your finances. You may also want to look into how pairing umbrella insurance with your homeowners policy could boost your liability coverage.
Extended Coverage for Valuables
A high-value home policy may provide broader coverage for different types of losses than a standard policy offers, including replacement cost coverage that would reimburse you for the cost of new items. You may also want to consider “scheduling” valuable belongings (jewelry, artwork, etc.) separately, so those possessions aren’t subject to your policy’s overall coverage limit or any sub-limits. Scheduled personal property is itemized and insured for its full value, and you may have the option to choose a low deductible or no deductible. This coverage also typically pays to replace the item without reducing the amount for depreciation.
Other Coverage Types
You may also want to purchase supplemental protection for perils standard homeowners insurance policies don’t cover. If you live in an area that’s at risk for floods, fires, or earthquakes, for example, your insurer may offer a policy add-on (endorsement) for the coverage you need.
High-Value vs Standard Homeowners Insurance
Standard homeowners insurance and high-value homeowners insurance share most of the same coverage categories. They can differ significantly, however, when it comes to coverage limits and how reimbursements are calculated and paid.
And, of course, their costs can differ as well. Because high-end homeowners insurance is more comprehensive, it tends to be more expensive than standard home insurance. Your home’s location, age, size, building materials, and other factors will all determine the cost of extra coverage. So will the value of the personal possessions you wish to protect, the amount of liability coverage you feel you need, and the deductible amounts you choose.
Your financial advisor or real estate professional may be able to help you determine how much insurance coverage makes sense for you.
Recommended: How Much Is Homeowners Insurance?
The Takeaway
While standard homeowners insurance can be used to cover a high-value home, there are limits on the amount a policy will pay if you make a claim.
If your home would be difficult or expensive to replace (generally $750,000 to $1 million or more), you may want to look into the benefits of high-value homeowners insurance. This type of insurance can offer an extra layer of protection—and your insurance company can help you customize your coverage to fit your needs.
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FAQ
How much does high-value home insurance cost?
The monthly or annual premium for high-value home insurance can vary significantly depending on what it would cost to replace your home, how much liability and personal property coverage you require, and other factors. The location, age, and size of your home can also affect the cost of a high-value policy.
Can I lower the cost of insuring a high-value home?
You may be able to lower your premiums by hundreds of dollars each year by increasing your policy’s deductible amounts. It can also be helpful to compare quotes from different companies so you’re sure you’re getting a fair premium. Maintaining the value of the home could also help keep insurance costs down.
Does high-value home insurance cover flood or earthquake damage?
Homeowners policies typically don’t cover flood or earthquake damage, but your insurer may offer a policy add-on (endorsement) for the coverage you need. Or you may choose to purchase a separate policy to cover these risks.
Do I need a separate policy for a high-value home?
You may want to consider high-value homeowners insurance if your home requires higher dwelling, personal property, and liability coverage limits than a standard homeowners policy offers. Not all insurance companies offer a specific high-value insurance policy, but you may be able to customize a standard homeowners policy with higher coverage limits.
What happens if my high-value home is underinsured?
The goal is to have enough insurance to cover your losses as a homeowner. If you’re underinsured, you may end up paying for some rebuilding costs out of pocket or sacrificing quality. In a worst-case scenario, you may not be able to replace your home or possessions, or it may be difficult to recover financially from an expensive lawsuit.
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