What Is High-Value Home Insurance?

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

Heritage homes or homes with unique architectural or interior design elements may fall into this category. Of course, they could just be a mansion. This type of insurance provides a complete set of coverages and is one of the most comprehensive available. High-value policies offer significantly more coverage than standard homeowners insurance policies.

How High-Value Home Insurance Works

Standard forms of home insurance that provide "average coverage" may not be enough to protect or replace your property if you file a claim if you have an above-average priced home. You may want to consider purchasing high-value home insurance to ensure that your policy limits are sufficient to avoid paying large sums of money out of pocket.

Will Standard Home Insurance Be Enough?

Though the specifics will depend on the terms of your contract, a standard homeowners insurance policy will cover a wide range of costs that may arise during the course of owning a home. At the most basic level, it covers the cost of repairing or rebuilding your home's structure if it is damaged. It will also replace any items that are taken or destroyed. (Claims of this type will take depreciation in the value of your items into account, and any payouts will reflect this.) It pays for lawsuits brought against you for bodily harm or property damage to others, as long as the cause is related to your home. Finally, it covers any additional costs you may incur while living away from home while your house is being repaired, such as hotel or home rental.

How Does High-Value Home Insurance Differ?

Most high-value home insurance policies provide all of the coverage provided by a standard home insurance policy, but with higher limits and additional coverage to meet the needs of people who own more expensive homes (and items within those homes).

Assume that John and Jane live next door to each other. Both have high-end residences with period features such as ornate wall carvings. Each house is currently worth $750,000 on the market. John has standard homeowners insurance with the same structural coverage limit. Jane has a high-value home insurance policy with guaranteed replacement cost coverage built in.

A major fire breaks out on their street, destroying both John and Jane's homes. Because the homes have hard-to-replace features and materials, the actual cost to rebuild each is $850,000. John's policy does not cover more than the stated limit, leaving him $100,000 short of what he requires after restoring his home to its former glory. In contrast, Jane's policy includes the option to cover the full cost of work, even if it exceeds the coverage limit.

What Does High-Value Home Insurance Cover?

The most common reason for purchasing high-end home insurance is increased coverage limits when compared to standard homeowners insurance policies, but it can also include a variety of extra perks or add-on services.

A high-end policy, as opposed to standard home insurance, includes higher policy limits or enhanced coverage for the following:

• Structural repair or replacement: Standard homeowners insurance may limit structural coverage to the cost of rebuilding the home. If you believe the true cost of rebuilding your home to its pre-damage condition will be more than what is stated in the contract, you should obtain extended or guaranteed replacement cost coverage. This is frequently an add-on or a rider that will increase your monthly costs. Many high-value home insurance policies, on the other hand, include extended or guaranteed replacement cost coverage as part of the package. This allows you to rebuild your home to its previous state even if the cost 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 is often 10% more expensive to insure your personal belongings at the cost of replacement rather than the true cash value. Furthermore, if your claim is based on the current cash value of your items, it will pay out less for older items than you paid for them when you first purchased them due to depreciation. High-value home insurance typically insures your items at replacement cost rather than current value, which results in a larger payout.
• Liability: Higher limits for personal liability, medical payments, and loss assessments are common in high-value policies. They also frequently cover the costs of defending against slander, libel, or defamation claims.
• Additional living expenses: You'll often benefit from much higher coverage limits for living expenses incurred while your home is being restored, such as hotel stays, meals, or laundry.

Some high-value home insurance policies also offer niche coverages that standard policies do not. They include costs you might not consider if your home is damaged, such as replacing locks if your keys are stolen, protecting against identity theft, or replacing food that has spoiled due to an outage. A policy may even cover the costs of a kidnapping or ransom, as well as legal fees.

Do I Need High-Value Home Insurance?

Not every home requires high-end home insurance. This type of coverage is intended for homes that would be extremely expensive to rebuild or repair, or for items in the home that are difficult or impossible to replace.

If any of the following apply to you, high-value home insurance may be a good option.

• Your home is worth $750,000 or more
• Your house is a historical landmark.
• Your home has older construction features that are not common in modern methods or practices.
• Your house has distinctive architectural features.
• Your home contains materials that are difficult to replace.
• You have valuable or priceless fine art, rugs, collections, jewelry, wine, or other items in your home.
• You chose high-end appliances or fixtures that are not available in regular stores.
• Interior and exterior design elements are one-of-a-kind, such as luxurious outdoor living areas, guest houses, swimming pool areas, custom landscaping, or bespoke features created by an interior designer.

How Much Does High-Value Home Insurance Cost?

Because of their increased coverage limits and top-of-the-line personalized experience, high-end homeowners insurance policies will cost more than standard versions. High-value home owners must budget for higher premiums each year. According to the most recent Insurance Information Institute data, homeowners in the United States paid an average of $1,249 in annual premiums for standard home insurance in 2018. A high-value policy will undoubtedly cost much more.

There are numerous ways to reduce the cost of insurance, regardless of the type.

• Get multiple quotes: To get the best rate, shop around with the major insurers in your state.
• Select a high deductible: The deductible is the amount you pay before your insurance coverage kicks in. A common tradeoff for lower premiums is to pay more out of pocket when filing a claim.
• Combine your home and auto insurance: Purchasing both policies from the same insurer can save you 5% to 15% on premiums.
• Look for discounts: Some insurers provide discounts to retirees, employees, and members of specific organizations.