Everything you need to know about buying high value home insurance:

1. What is a high value home?
2. What is high value home insurance?
3. What are the coverage options for luxury homes?
4. How much more do high value home insurance policies cost?
5. Best high value insurance companies: comparative analysis
Conclusion: Is buying high value homeowners insurance right for you?

You’ve worked hard to achieve financial success in your life, and you’ve invested significant time and wealth into your home. But when things happen that are outside of your control, like natural disasters, structural issues, or theft, how can you guarantee that your home and assets are secure? If you own a high value home, you need to protect your assets with expanded insurance coverage.

Most importantly, you want what’s best for you, your home, and your family. But how do you know if high value home insurance is right for you? What’s the difference between high value home and standard homeowners insurance and why does it matter? As a responsible homeowner, these are the types of questions you’re probably asking yourself.

If you think the homeowner insurance topic can seem overwhelming, you’re not alone! That’s why we’ve set out to create this comprehensive resource. We’re here to help High Net Worth Individuals (HNW or HNWI) and high income families and individuals like you navigate the ins and outs of high value home insurance. In reading this guide, we hope you’ll feel empowered and confident when making your homeowner insurance decision.

1. What is a high value home?

High value homes are generally categorized as homes that have a value of $750,000 or more. Because high value homes require unique coverage needs, these homeowners are better off getting high value home insurance coverage rather than standard homeowner insurance policies.

Many people think of a high value home in terms of the property’s market value, also known as the purchase price. For example, one might think a ranch in Montana and a townhome in San Francisco are equally valuable since they both have a purchase price of $1,000,000. But this is not how insurance determines what is or is not a “high value home”.

For insurance purposes, the term indicates how much it will cost to rebuild the home from the ground up. This includes everything from exterior structural details to interior flooring, cabinetry, and other built in appliances.

So for instance, if your home burns down and appraisers determine that it costs $750,000 or more to completely rebuild, then you have what insurance companies consider to be a high value home. According to Whit Ferguson of Piedmont Insurance Brokerage, the average value for these homes falls in the $1 million to $1.5 million range.

2. What is high value home insurance?

High value home insurance policies provide coverage for everything that traditional homeowners insurance policies offer, but with higher category limits and expanded coverage for your possessions. Some even come with policy benefits like immediate reimbursements after a loss. In addition, insurance companies that offer these policies typically place a lot emphasis on providing a concierge level service for clients.

But aside from the policy perks, why else would someone benefit from high value home insurance?

Is buying high value home insurance worth it?

Here’s a few common reasons why luxury home owners choose to get expanded coverage:

Property Damage

Property damage is the most common and most important reason why people purchase home insurance. According to national data of research conducted between 2014-2018, the three categories where homeowners incurred the highest losses were wind and hail, fire and lightning, and water damage and freezing:

• Wind & Hail (31.76% of losses incurred over 4 years)
• Water & Freezing (30.4% of losses incurred over 4 years)
• Fire & Lightning (27.64% of losses incurred over 4 years)

Of these national claims, fire damage tends to be the most expensive with a weighted average of $79,785 per claim. For HNWI, these average claims are typically much higher.

Theft

If you’ve hired a staff to work at your home or often have guests occupying your residence, it’s understandable that you’re concerned about theft. Valuable possessions are also attractive to burglars. In addition to stealing your possessions, burglars may also cause damage to assets or property during a break in. Your insurance policy can protect you from incurring such losses and damages in the event of theft.

Value Appreciation

Standard insurance policies may not account for the full value of items that appreciate over time. Luxury items, such as antiques, jewelry, rare art, Persian rugs, or a cellar stocked with vintage wines, can be covered with high value home insurance policies.

Unique Construction Elements or Home Design

Do you have a heritage home with historic or unique construction practices? Did you hire an architect to design your home or property with unique construction or landscaping features? If so, you’ll want to account for this value with an expanded insurance policy.

High-priced Appliances

Traditional policies won’t account for your expensive built in appliances, decorations, or fixtures not found in standard stores. Therefore, you want to properly account for your premium appliances with high value home insurance coverage.

Do you own a luxury estate, heritage home, or high value home as we’ve described above with valuable possessions to protect? If so, then this type of expanded coverage is perfect for you.

3. What are the coverage options for luxury homes?

Unlike traditional homeowner policies, high value home insurance policies cover your home and your personal property at it’s replacement cost–all of which is insured against “all risks“. Above all, this is the primary factor that differentiates high value home insurance policies from traditional policies.

But aside from the “all risks” coverage, what are the other coverage options generally included in luxury home policies?

The most common types of coverage options from our designated carriers (PURE, Chubb, AIG,) includes:

Cash Settlement

A significant benefit to high value home insurance policies is the cash settlement option. You can choose not to rebuild in the event of a total loss, and instead opt for a cash settlement up to the policy limit.

Extended or guaranteed replacement coverage

This coverage guarantees that your carrier will rebuild or repair your home to its previous state even if the cost of the rebuild exceeds your policy limit.

No-cost home inspections

Most high-end insurers include home inspections at no additional cost. Carriers offer this because it helps them calculate your coverage amount correctly. Chubb offers a unique HomeScan process in an effort to prevent loss and damages as does PURE with their PURE360 consultation.

Temporary living arrangements and expenses

What happens if you need to live in a temporary residence during the rebuild process? Thanks to the HNW policy, carriers will help you find a comfortable place to stay. In addition, some policy plans will even include a stipend for living expenses.

Building Ordinance

Most policies include unlimited coverage available during the rebuild process for necessary upgrades due to modern building codes. In other words, if part of your home that suffered a covered loss is in need of a mandatory upgrade, carriers will cover that expense.

Medical Payments

Some high value home policies will include up to $25,000 in medical payments coverage in the event of a covered loss. In some cases, this coverage even extends to pets.

Sewer and Drain Backup

One of the most common (and costly) causes of loss is the overflow or backup of sewers, drains, or sump pumps. Therefore, HNW policies will generally offer this type of protection with much higher limits than standard policies.

Additional high value home insurance coverage options

Excess Liability & Umbrella Liability Coverage

In the event that someone files a lawsuit against you, this coverage will reimburse you for legal fees, fines, and restitution. Umbrella policies begin once the liability limits are reached. Umbrella policies typically increase in $1million increments, and can reach limits as high as $100 million.

Liability insurance for domestic help

This coverage takes care of your home staff medical expenses and lost wages while they’re unable to work. This policy option also covers your legal fees if a home employee sues you for wrongful termination, discrimination, or injuries.

Flood insurance

As previously mentioned, water damage is the most common and costly cause of loss to homes. Unfortunately, flood insurance provided by the National Flood Insurance Program doesn’t offer sufficient coverage for luxury homes. For that reason, HNW insurance policies offer more suitable limits as part of their package.

Identity theft insurance

As identity theft crimes surge, HNW individuals continue to be targets. Identity theft coverage protects you from fraudsters who try to fake your identity to steal your assets.

Computers and electronics coverage

This coverage varies depending on the cost and year of you computer and electronic equipment. However, the cap on this category is usually in the $1,000-2,500 range.

4. How much do high value home insurance policies cost?

High value homeowners insurance policies are generally more expensive than the average $1,200 cost for standard homeowner insurance policies. Factors such as your home location, credit score, age and build of your home, and amount needed to protect your additional high value items, all contribute to your high value home insurance policy cost.

To ensure that you’re getting the best value for your home and possessions, you should have a customized coverage plan. Simply put, your property and assets are unique; your insurance plan should be too.

As Piedmont Brokerage founder Whit Ferguson puts it:

“Many times we see something we call “policy patchwork” where policies are placed with different companies and agencies, especially with multiple properties in the portfolio.  This can result in missing on savings as well as gaps and overlaps in coverage. By streamlining your policies with one agency, you will leverage all discounts available and avoid overpaying to be underinsured.

We have found time and time again that better doesn’t always have to cost more when it comes to high-value home insurance.  Many of the overlooked opportunities include deductibles being too low, not receiving proper credits for home/car alarms, fire and theft detection and other lifestyle type credits.”

If you’re looking for high value home insurance, contact Piedmont Brokerage today to get a quote and find the best policy to fit your needs. Piedmont Brokerage’s team will help you compare insurance policies to find the most ideal plan for you.

5. Best high value insurance companies: comparative analysis

Piedmont Brokerage only offers the best value carrier options for High Net Worth clients. Therefore, if you’re in the $2million plus range, we’ll compare options from PURE, Chubb, and AIG.

Below is a comparative breakdown of our top three carriers that specialize in luxury home coverage. If you have any questions about these policies or would like a quote, our agents are available to help.

PURE

Privilege Underwriters Reciprocal Exchange (PURE) was founded in White Plains, New York in 2006. Importantly, PURE is a member-owned company rather than a publicly traded company. This means they’re in a unique position they’re able to accommodate market needs and demands without heavy influence or pressure from Wall Street.

Here’s some of the high value home insurance coverage options PURE policies include:

• Cash Settlement
• Sewer and Drain Backup
• Guaranteed Replacement Coverage
• Extended Jewelry Protection (up to $50,000)

Chubb

The Swiss company Chubb was purchased by the North American firm ACE in July 2015 for $28.3 billion. ACE later adopted the Chubb name in 2016, and is currently conducting most of its operations from its North American headquarters in Warren, NJ.

Chubb’s Masterpiece policy provides extensive coverage for HNW families, including:

• Cash Settlement
• Extended Replacement Coverage
• No-cost Home Inspections (HomeScan)

AIG

American International Group, Inc (AIG) dates back to 1919. Their headquarters is in New York City, however, as their name suggests they operate in over 80 countries and jurisdictions.

AIG’s Private Client high value home insurance policy policy offers an excellent package for HNW families and individuals. Some of the policy features include:

• Full Replacement Coverage
• Cash Claims Settlement
• Temporary Living Arrangements & Expenses
• Extended Rebuild Coverage

Conclusion: Is buying high value homeowners insurance right for you?

In conclusion, if you’re a high net worth individual or family with a property value of $750,000 or more, then purchasing high value home insurance coverage is a smart–and necessary–decision. Not only will you receive protection for your home property, but your valuable personal possessions can receive coverage as well.

For HNW individuals, the question isn’t really “should I get high value homeowners insurance”, but rather “am I overpaying because I’m underinsured?”. Chubb (formerly ACE) conducted an extensive survey of over 600 independent insurance agents and determined that the answer is yes–most wealthy are at risk of being underinsured.

To assure your high value home insurance deductibles aren’t too low, and that you’re getting the premium credits and maximum package discounts, you should contact a Piedmont Brokerage agent right away. The experts at Piedmont can help you get the best coverage options available to protect what matters most: your home. As a result, you’ll have peace of mind knowing that if and when disaster strikes, you’ll be safe and sound.

Author: Whit Ferguson