Everything You Need to Know About Insuring Your Luxury Home

07 Feb

If you have just purchased your luxury dream home or just have a high value home, you may need to consider high-value home insurance which is also known as luxury home insurance. Not sure if you need this type of coverage, keep reading to learn everything you need to know about insuring your luxury home. 

What is considered a high-value home?

In most cases, it depends on where you live. In some communities, a $400,000 home may be considered high-value by community standards while in another area, a $1million home may be considered fairly standard. 

Regardless of where you live, most insurers have their own specific criteria that must be met to be considered for high-value home insurance. While it can vary by insurer, in most cases, a home must have a replacement cost value of $750,000 to be considered for a luxury home policy. 

The replacement cost value factors in the entire cost of rebuilding a home. This includes the structure of the home as well as appliances, major systems, flooring, roofing and all other costs to rebuild your home. 

How is a high-value policy different?

Luxury home policies have several differences from a standard policy, most of them involve the coverage types and amounts. Here are some of the larger differences between luxury and standard policies:

  • Higher coverage limits: These policies have higher coverage limits and offer broader coverage than a standard policy. As an example, luxury home policies typically cover your home and personal property at replacement value as an open perils policy. This means there are no losses that are excluded in your coverage and all your personal possessions are covered by replacement value coverage.
  • Additional coverage options: Many luxury home policies will offer additional coverages that are not included with a standard policy. This may include coverages such as water backup, landscaping, identity theft, and business property coverage. These would often be add-on for a standard policy. 
  • Policy perks: While if varies by insurance company, many offer perks to high value policy holders that may include deductible waivers, free home appraisals, a cash settlement option and even free risk consulting.
  • Specialty customer service: While it varies by insurance company, many offer dedicated customer service to their high value policyholders. You may have access to a personal rep or concierge. 

High-value homeowners insurance costs

The cost of a high value policy will vary dramatically depending on the specifics of your home as well as your personal factors. According to Bankrate.com, the average premium for a high value home insurance policy with $750,000 in dwelling coverage is $2,568. This translates into $214 per month. 

A standard homeowners policy with $250,000 in coverage runs roughly $1,312, according to Bankrate which breaks down to $109 per month.

Consider these things when shopping high-value homeowners insurance

Consider the following when shopping for luxury homeowners coverage:

  • Coverage levels: Be sure to consider the coverage levels when shopping for luxury home insurance. Always make sure you are purchasing enough coverage to fully protect your home. Check with your agent or insurer for coverage recommendations. 
  • Customer service: Customer service is always important. Be sure to read reviews of the claims process for any insurer you are considering. Look for policies that offer a dedicated customer service rep as they can be a huge help when you have to make a claim or are looking for information about coverage levels. 
  • Premium: While shopping your premium is always important, price should not be the only factor you consider. Excellent customer service, quick and fair claims processing is also a key consideration. Shop a variety of insurers to find the right combination of price, service, and perks for your specific situation. 

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