High Value Home Insurance

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High value home insurance policies at the best value.

Your home is your biggest asset, so it’s important to do all that you can to protect it.

There are special considerations when insuring a high value home. There are also several coverages that are often more relevant to high value homes. If you own a high value home, then here is a summary of items you should know.

The Dwelling Amount

The most important and basic step of insuring any home is to insure the home for the proper dwelling amount. The dwelling coverage should equate to the cost to rebuild the home. This dwelling coverage is not the market value but is the estimated cost to rebuild the home new. In the case of a high value home, when the dwelling amount is greater than $1,000,000 many insurance companies will send out a professional appraiser (at no cost to you) to verify this dwelling amount. If you own a high value home and the insurance company did not send out a professional appraiser, then you may not be insured for the proper amount.

Guaranteed Replacement Cost coverage on the dwelling

A few insurance companies such as Erie Insurance and Chubb offer guaranteed dwelling replacement cost. This means that for a covered loss there is no cap on what the insurance company will pay to replace the home. So, if the home is insured for $1,000,000 and it burns to the ground and the actual cost to replace the home is $2,000,000, then the insurance company would pay $2,000,000 to rebuild the home. This guarantee can give peace of mind that the home will be fully replaced for a covered loss.

HO-3 vs HO-5

If you own a high value home then you should be familiar with the difference between a HO-3 policy and a HO-5 policy. A HO-3 home insurance policy has comprehensive perils coverage on the dwelling (the structure of the home) but only named peril coverage on the personal property. A HO-5 policy has comprehensive perils coverage on both the dwelling and the personal property. Comprehensive perils are the better coverage. It covers all perils except for exclusions. If the insurance company does not list an exclusion, then it is covered. Named perils coverage, covers only what is named, such as: fire, lightning, wind, hail, theft, explosion, smoke, falling objects, etc. But unless it is named it is not covered.

Scheduled Coverage for Jewelry or Furs

Home Insurance policies come with a set limit of coverage for jewelry and furs – typically $2000-$5000. If you own items jewelry or furs of greater value, then additional coverage should be scheduled on to your home insurance policy.

Loss of Use Coverage

Loss of Use Coverage is coverage that pays the additional expense to have you live somewhere else if your home becomes unlivable due to a claim. The standard coverage is designed to provide coverage for up to 12 months; but with some insurance companies you can increase this coverage for up to 2 years. A high value home may take longer than a year to rebuild, so this is an important coverage to consider.

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Fire

Risk Factor

Most fires are devastating. Besides the emotional impact, the physical damage to your home can be significant. If you lost your home to fire, do you have adequate insurance to replace your home and its contents? Remember, inflation rates on building materials and construction costs rarely track with real estate values. As a result, rebuilding a home can often cost significantly more than expected.

Solution

Be sure to look for coverage that will account for replacement costs above the actual value of the home due to increased costs for building materials and construction. Also, local ordinances and building codes tend to change over time, which may require additional expense. Talk to your agent to find out what’s available for your home.

Personal Property / Contents - Property Damage

Risk Factor

When your home suffers damage due to an unexpected event, your personal property is also at risk. Furniture, appliances, clothing, electronics, and other personal items can also be damaged or destroyed.

Solution

Your homeowners insurance policy typically covers personal property, including the contents of your home and other personal items owned by you or family members who live with you. Make sure your homeowners policy includes replacement cost coverage for personal property so that you always receive the full cost to replace whatever item is damaged.

Additional Living Expense / Loss of Use

Risk Factor

When there is substantial damage to your home due to unexpected events such as lightning, fire, or a storm, you may not be able to live in your home until it can be repaired or rebuilt–potentially incurring additional living expenses for lodging, food, and other daily needs.

Solution

Ensure that your homeowners insurance policy provides additional living expense or loss of use coverage to compensate you for the additional costs you incur for reasonable housing and living expenses if a covered event makes your house temporarily uninhabitable while it's being repaired or rebuilt.

Jewelry, Fine Arts, and Collectables

Risk Factor

If your diamond ring disappears or valuable artwork is stolen, your standard homeowners policy may not compensate you for the loss. Homeowners policies include coverage for your belongings and personal property, but some special items like jewelry, furs, silverware, antiques, collectibles, and other valuables have limited or no coverage and need to be insured separately.

Solution

Valuable possessions insurance covers personal property that may have unique value, cannot be replaced like regular personal property or is subject to special types of losses such as breakage or mysterious disappearance. For most valuable possession categories, there is no deductible applied at time of loss. Valuable possessions insurance can be added to your homeowners policy or may be written as a separate policy.

Medical Expenses

Risk Factor

If a guest is injured while on your property, even when it’s due to a friendly game of baseball, you may be required to pay any medical expenses associated with their injury.

Solution

Your homeowners policy should include medical expenses coverage to take care of injuries and treatment - generally not of a serious nature. In the event a person is injured on your property and requires medical attention, you would be able to submit the injury-related medical expenses to your insurance carrier. Medical expenses are usually paid without a liability claim being filed against you.

Personal Liability

Risk Factor

In the unfortunate event that someone slips and falls while on your property, you and your family may be held liable for any injuries that result.

Solution

Your homeowners policy includes personal liability coverage to respond to incidents where injuries or damages occur to a third party where you may be deemed negligent. However, you should consider purchasing a personal umbrella or excess liability policy to provide additional coverage limits to protect your assets in case a lawsuit is brought against you.

Miscellaneous Coverage

Risk Factor

The fun that comes with having a trampoline in your backyard can also be accompanied by serious risks, which may not be covered under your standard homeowners insurance policy since coverage varies from state to state and between insurance companies.

Solution

You should make sure your homeowners insurance policy covers your trampoline, as many insurance providers refuse to take on trampoline liability and exclude the item from coverage.

Personal Injury

Risk Factor

Young people are usually very active online. However, using social media and other sites can increase the possibility of them directly or indirectly damaging someone's reputation and exposing you, the parent, to a lawsuit.

Solution

Your homeowners insurance policy includes liability coverage for property damage caused by any member in the family, but it may not cover rumors or statements that damage a reputation. You need to add an endorsement to your policy to expand coverage to include liability protection that covers personal injury.

Umbrella / Excess Liability Coverage

Risk Factor

You invite guests over for a pool party and one of your guests dives into the shallow end of the pool and is permanently injured. They hire a lawyer to represent them and after a long legal battle, you and your family are left financially responsible for their injuries. Do you have enough money in savings to cover your legal responsibilities as well as the legal defense costs?

Solution

An umbrella or excess liability policy increases your personal liability limits by adding protection over and above your current auto, boat, or homeowners policies-providing real financial value, as well as priceless peace of mind. Excess liability insurance is available either by an endorsement to your homeowners policy or available as separate coverage.

Flood Coverage

Risk Factor

You do not have to live near a body of water to suffer loss due to flooding. With the changing weather patterns and more damaging storms occurring around the globe, flood losses are becoming more common in places that are not normally prone to flood damage. Your homeowners policy does not cover damage from flood. Could your home be at risk?

Solution

Purchase a flood insurance policy to protect your home and covered contents from certain types of flood losses as designated by the National Flood Insurance Program. A flood policy is purchased as a separate policy through the federal program (NFIP) or through a servicing carrier known as a write your own carrier.

Secondary Home

Risk Factor

Owning a secondary home has the potential of increasing your liability exposures.

Solution

Be certain that you extend the liability coverage under your homeowners policy to include your secondary home. You should also consider including the secondary home under an excess liability or umbrella policy to provide for additional liability limits.

Collector Cars

Risk Factor

Collector vehicles often have significant value and require specialized insurance coverage and claims handling.

Solution

Schedule your collectible vehicle on a separate collector car policy. By doing so, you are protecting the vehicle for either the appraised value or market value.

Wine Collection

Risk Factor

If you are a connoisseur of wine, you know that it is susceptible to outside environmental exposures that can ruin it. If the collection is damaged, coverage from your homeowners policy is a possible recourse. However, the damage is only insurable if it is a covered cause of loss as outlined in your homeowners policy. A deductible would also apply.

Solution

If you have a sizable wine collection, you may want to consider scheduling the collection on your homeowners policy. Doing so expands your coverage and eliminates the deductible in case of a loss. You can also consider unique coverages for wine, such as for spoilage.

Water Backup

Risk Factor

Most homeowners policies exclude coverage for water back-up damages as a result of a clogged drain, sewer, or sump pump.

Solution

Water backup coverage can be added to most insurance policies. Consider adding it so that you have the coverage you need in the event of damages caused by a clogged drain, sewer, sump pump, and related risks.

Off-Premises Theft

Risk Factor

Surprisingly, standard auto insurance does not cover personal property or contents stolen from your car.

Solution

Most homeowners policies offer an option to include off-premises theft coverage as an endorsement, which covers you for theft of your personal property away from your residence.

Ordinance or Law Coverage

Ordinance or Law Coverage covers the additional expense to rebuild a home up to code. This is important for older homes since the cost to rebuild an older home up to current code could be a substantial.

Umbrella Insurance

Umbrella Insurance is additional liability coverage that is designed to go over the underlying liability limits of your home and auto insurance. Umbrella insurance typically comes in increments of $1,000,000. Umbrella insurance is inexpensive, and it typically provides personal liability coverage for you anywhere in the world.

Other optional home insurance coverage to consider includes: Sewer and Drain backup coverage, Underground Service Line coverage, Equipment Breakdown coverage, and Earthquake coverage.

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