High-Value Home Insurance: What Is It?

Definition and Examples of High-Value Home Insurance

High-value home insurance is a type of homeowners insurance that is designed for homes with high market value. A high-value home is defined as property worth $750,000 or more.

Homes that fall into this group might include heritage homes, or homes with special architectural or interior design elements. Of course, they may simply be a mansion. This type of insurance is a full package of coverages and is one of the most comprehensive you can buy. High-value policies provide much better coverage than a standard homeowners insurance policy.

How High-Value Home Insurance Works

If you have an above-average priced home, standard forms of home insurance that provide “average coverage” may not be enough to protect or replace your property if you file a claim. To ensure that your policy limits are high enough to avoid paying large amounts of money out of pocket, you may want to think about buying high-value home insurance.

Will Standard Home Insurance Be Enough?

Although the details be set according to the terms in your contract, a standard homeowners insurance policy covers a wide range of costs that might occur in the course of owning a home. At the most basic level, it pays for the cost to repair or rebuild the structure of your home if it is damaged. It will also replace the items within it if they’re taken or destroyed. (Claims of this nature will factor in depreciation in the value of your items, and any payouts will reflect this.) It funds lawsuits that a person might bring against you, due to bodily harm or damage to others’ property, so long as the cause relates to your home. Lastly, it covers any extra costs you might incur for living away from home while your home is being repaired, such as for a hotel or home rental.

How Does High-Value Home Insurance Differ?

Most high-value home insurance policies provide all of the coverage offered by a standard home insurance policy, but with higher limits and extra coverage for the unique needs of people who own expensive homes (and items within those homes).

For example, suppose that John and Jane are next-door neighbors. Both have high-end homes with period features, including ornate wall carvings. Each home has a current market value of $750,000. John has standard homeowners insurance with a structural coverage limit of that same amount. Jane has a high-value home insurance policy featuring a built-in guaranteed replacement cost coverage.

A major fire occurs on their street, and both John and Jane’s homes have to be rebuilt. Because the homes have features and materials that are hard to replace, the current cost to rebuild each is $850,000. John’s policy does not cover more than the stated limit, which leaves him $100,000 below what he needs, after his home is built back to his former glory. In contrast, Jane’s policy comes with the extra feature, so it would cover the full cost of work, even if it exceeds the coverage limit.

What Does High-Value Home Insurance Coverage?

The most common reason for choosing to purchase high-end home insurance is expanded coverage limits, compared to standard homeowners insurance policies, but it can also include a wide range of extra perks or add-on services.

Compared to standard home insurance, a high-end policy includes larger policy limits or enhanced coverage for the following:

• Structural repair or replacement: Structural coverage for standard homeowners insurance may be limited to the cost to rebuild the home. If you think the true cost to build your home back to the state it was in before damage occurred will be higher than what is stated in the contract, you’ll need to get extended or guaranteed replacement cost coverage. This is often an add-on or a rider that will cost you more each month. In contrast, many high-value home insurance policies include extended or guaranteed replacement cost coverage as part of the package. This will allow you to rebuild your home to its former state, even if the cost of doing so exceeds your stated limit.

• Possessions: High-value home insurance affords higher limits for items like money, jewelry, art, antiques, or even business items kept at home. If you only have a standard policy, it often costs 10% more to insure your personal belongings at the cost to replace them, versus the true cash value. And if your claim is based on the current cash value of your items, it will pay out less for older items than you first paid for them, due to depreciation. High-value home insurance most often insures your items at the replacement cost, rather than at the current value, which will give you a bigger payout.
• Liability: High-value policies often include higher limits for personal liability, medical payments, and loss assessments. They also often cover costs if you need to defend against claims of slander, libel, or defamation.
• Additional living expenses: You’ll often enjoy much higher coverage limits for living costs you incur while waiting for your home to be restored, such as hotel stays, meals, or laundry.

Some high-value home insurance policies also provide niche coverages that are not often offered by standard policies. They include things you might not even think of if you suffer home damage, such as the cost to replace locks if your keys are stolen, or to protect against identity theft, or the cost to replace food that has been spoiled due to an electric outage. A policy might even cover the costs of a kidnapping or ransom, and legal defense fees.

Do I Need High-Value Home Insurance?

Not every dwelling needs high-end home insurance. This type of coverage is specifically designed for houses that would cost a great deal to reconstruct or repair, or if the items in the home are hard or impossible to replace.

High-value home insurance might be a good choice for you if any of the following are true.

• Your home is worth $750,000 or more
• Your home is a heritage home
• Your home has older construction features not found in common methods or practices
• Your home has unique architectural features
• Your home uses materials that are hard to replace
• 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 can not 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

How Much Does High-Value Home Insurance Cost?

High-end homeowners insurance policies will cost more than standard versions, because of their increased coverage limits and top-of-the-line personalized experience. Owners of high-value homes need to budget for higher premiums each year. In 2018 (the latest data from the Insurance Information Institute), homeowners in the US paid, on average, $1,249 in annual premiums for standard home insurance. You can bet that a high-value policy will be much higher.

There are many ways to reduce the price you pay for insurance, no matter the type you choose.

• Get multiple quotes: Shop around with the major insurers in your state to get the best rate.
• Choose a high deductible: The insurance deductible is the amount you pay before your insurance coverage kicks in. Opting to pay more out of pocket when you file a claim is a common tradeoff for lower premiums.
• Bundle your homeowners and auto insurance: Buying both policies from the same insurer can save you anywhere from 5% to 15% on premiums.
• Look for discounts: Some insurers offer discounts for retirees, or for employees or members of certain organizations.