A Guide to Homeowners Insurance for Luxury Homes
Homeowners insurance offers several important coverages that protect you, your home, and your personal property against a variety of common hazards, ranging from vandalism and theft to windstorms and fires.
But for those who live in high-value luxury homes, a standard home insurance policy may not offer the coverage you need to secure all of your assets.
High-value homeowners insurance offers several additional perks and coverage options for individuals that own luxury homes. Depending on your home’s value, this type of home insurance can offer the extra coverage you need to protect your home and personal property against common perils.
Here’s what you need to know about homeowners insurance for luxury homes.
What Does Homeowners Insurance Cover?
A standard homeowners insurance policy includes four main coverages to protect your home and personal property against damages, including:
- Dwelling coverage
- Other structures coverage
- Liability coverage
- Additional living expenses coverage
Homeowners insurance policies may also include additional coverages, like medical payments coverage, but these four coverages are the primary coverages that protect your property and personal belongings.
Dwelling coverage
Dwelling coverage helps pay to repair or rebuild the structure of your home if a covered hazard like a hurricane or fire damages it. To ensure your policy will pay to rebuild the entirety of your home’s structure, consider choosing a replacement cost value policy, which will pay to rebuild your home to its original quality based on the current price of construction materials and labor.
Other structures coverage
If your home has detached structures, like a detached garage, shed, deck, or fence, then other structures, coverage can help pay to repair or rebuild these structures if they are damaged by a covered peril.
Personal property coverage
Personal property coverage covers your personal belongings, including items like electronics, appliances, furniture, clothing, jewelry, and other valuables. This coverage also applies to personal belongings that aren’t located in your home. For example, if you have personal belongings stored in your car and a covered disaster destroys them, your homeowners insurance policy will still pay to replace them up to your coverage limit.
To determine how much personal property coverage you need, you should take an inventory of your personal belongings and adjust your coverage limits as necessary.
Liability protection
Liability coverage helps pay for damages when someone holds you liable for causing personal injury or property damage to someone else. This coverage can cover expenses like court costs, settlements, and more.
Homeowners may also choose to purchase umbrella insurance to increase their liability limits if their homeowners insurance policy doesn’t offer enough coverage.
Additional living expenses (ALE)
If a covered disaster damages your home and it forced you to temporarily relocate, additional living expenses coverage, also known as loss of use coverage, can help cover your temporary living expenses. This may include hotel, food, pet care, and other costs.
What Isn’t Covered by Home Insurance?
Homeowners should also understand what isn’t covered by home insurance so that they can fill these coverage gaps by purchasing supplemental insurance policies, like flood insurance.
Earthquakes and floods
Typically, homeowners insurance policies do not cover any damages caused by earthquakes or floods. Depending on your home’s location, this may or may not be an issue.
If you live in an area prone to earthquakes or floods, you may need to purchase an earthquake or flood insurance policy separately to cover your home against these disasters.
Some types of water damage
While home insurance policies cover you against certain types of water damage, they do not cover you against all types of water damage. For example, if water damages your home resulting from a sewer overflow or backup, a standard home insurance policy will typically not cover the damages.
Homeowners neglect
Lastly, home insurance policies do not cover damages resulting from neglect or a lack of maintenance.
For example, if you suffer damages caused by mold, water, rust, or insects, and you could have prevented the issue through regular home maintenance, then your home insurance policy will likely not cover the damages.
Identity theft
High-value homeowners are often more susceptible to identity theft, but unfortunately, identity theft is typically not covered by standard home insurance policies. Though, with a high-value home insurance policy, this coverage is often available as an optional endorsement.
High-Value Home Insurance for Luxury Homes
If you own a luxury home and the coverages outlined above aren’t sufficient to cover your property and personal belongings, then high-value homeowners insurance may be the right option for you.
High-value homeowners insurance, also referred to as luxury homeowners insurance, offers additional coverages and perks for individuals whose homes exceed a certain value. In general, to qualify for high-value homeowners insurance, your home’s replacement cost value needs to exceed $750,000. This is the cost it would take to rebuild your home to its original quality based on the current costs of building materials and labor.
Benefits of High-Value Homeowners Insurance
Luxury homeowners insurance policies offer several advantages over standard home insurance policies.
These policies offer more coverage options, higher coverage limits, and other perks that can help those with high-value homes protect their property and belongings.
Higher coverage limits
Luxury home insurance policies offer higher coverage limits to ensure your property and all of your belongings are covered.
Typically, high-value policies are open peril policies that offer replacement cost value for your home and belongings, meaning that any losses you experience will be covered unless specifically excluded by your policy.
With high-value home insurance, you will also typically be able to increase coverage limits for valuables beyond the limits offered by standard home insurance policies. This is great for homeowners that own valuable jewelry, art, and other particularly expensive items.
Additional coverages
High-value home insurance is designed to meet the needs of homeowners with luxury homes and expensive belongings. As a result, these policies give homeowners the option to purchase several additional coverages not offered by standard home insurance policies, including:
- Flood insurance: High-value home insurance often gives homeowners the option to purchase flood insurance as an endorsement. Standard homeowners insurance policies do not cover floods, but for homeowners living in flood zones, flood insurance is often a necessity. Flood insurance purchased as a high-value home insurance endorsement also often provides more coverage than flood insurance policies offered through the National Flood Insurance Program.
- Identity theft insurance: Identity theft can cause extreme distress and financial damages, particularly for high-net-worth individuals. Luxury home insurance often includes identity theft coverage that can help you recover your stolen identity.
- Medical coverage for pets: While less common, some luxury home insurance policies even offer medical insurance for your pets. This coverage can cover expenses like vet visits, pet care, and pet boarding costs if you must temporarily relocate after a covered loss.
- Excess liability coverage: Liability coverage offered through standard homeowners insurance policies may not be enough if you own a high-value estate. High-value home insurance policies offer additional liability coverage to help cover legal expenses if you are sued due to property damage or personal injury.
- Ransom insurance: Wealthy individuals are more likely to be targeted by criminals hoping to kidnap them and hold them ransom for significant amounts of money. This coverage can help pay the amount demanded and can pay to hire assistance in resolving such a situation.
- Vacation home coverage: If you also own a separate vacation home. Your high-value home insurance policy may offer coverage for your vacation home.
Depending on your insurer, there may be more options for coverages available to you, so be sure to ask about what endorsements are available when shopping for high-value homeowners insurance.
Benefits for policyholders
High-value home insurance policies also often offer perks for policyholders that go above and beyond the coverages included in the policies.
For example, high-value home insurance policies may offer benefits such as:
- Free home inspections
- Free home appraisals
- Cash settlements after covered losses
- Deductible waivers
- Risk consulting
- And more
These perks allow homeowners to get even more value out of their home insurance policies.
Improved customer service
Often, homeowners that purchase luxury home insurance will get access to a dedicated customer service representative.
This makes it much easier for homeowners to file and process claims quickly after a covered loss. In some cases, you may also be able to contact your dedicated customer service representative to schedule appraisals, hire contractors, and more.
How Much Does High-Value Home Insurance Cost?
The cost of high-value home insurance depends on a variety of factors, including:
- Location
- Home age
- Your home’s replacement cost value
- Credit score
- Claims history
- Coverages
- Coverage limits
- Deductibles
- Discounts
High-value home insurance policies typically cost more than standard home insurance policies due to the higher coverage limits and additional coverage options that they offer. Be sure to ask your insurance agent about potential discounts that could help you save on your luxury home insurance policy.
Request a Quote
If you own a luxury home worth more than $750,000, high-value homeowners insurance can provide the additional coverage you need to secure your home and protect your personal belongings against potential damages.
At KSA Insurance, we work with homeowners in South Carolina and across the southeastern United States to help them find affordable home insurance policies that meet their financial and coverage needs.
Contact KSA Insurance today to request a quote and learn more about high-value homeowners insurance.
