We often talk about homes being our clients’ most valuable assets, and advise them to make sure their homeowners insurance is adequate to rebuild the home and fully replace the contents if the home were to be severely damaged or destroyed. For some clients who own higher value homes, this is even more crucial. A standard homeowners policy may not provide enough coverage.
Are you underinsured?
Here are some special areas of concern for owners of homes valued at $500,000 and up:
Replacement cost of structure. If your home is destroyed, what would it cost to rebuild it? High value homes often have costly custom features, and the replacement cost coverage should reflect that.
High value homes often have other structures on the property which are not attached to the home, such as guest homes, gazebos, outdoor kitchens, or boat docks. You’ll want to talk to your agent about coverage for these structures.
Contents coverage. Much of your investment in your home is not just the structure itself, but also in your furnishings, valuables, or special collections. Coverage for personal property is typically 50 percent of the value for which the home is insured. Conduct a home inventory to determine the value of your belongings, and discuss with your agent whether you should increase your contents coverage.
In addition, you’ll want to be sure expensive items or collections—such as furs, jewelry, art, firearms, Persian rugs, or vintage wines—are covered up to their true value. This is especially true of items that may appreciate in value. Most standard homeowners insurance policies cap value for items like this.
Liability. If you have an expensive home, you probably also have other assets you’ll want to protect. Homeowners insurance policy liability limits usually start around $100,000, but recommended coverage is higher—at least $300,000 to $500,000. If you want more coverage, it’s wise to buy an umbrella or excess liability policy. You’ll receive broader coverage as well as higher liability limits.
Higher coverage, higher cost?
If you’re concerned about the price of higher coverages, you can save money by going with a higher deductible ($2,500 all the way to $10,000 rather than $1,000, for example). Owners of high value homes can usually afford a higher deductible if they have a claim.
At L & M Insurance Group, we understand the needs of owners of high value homes. We are independent agents with multiple homeowners insurance companies to choose from, as well as the expertise to find you the most cost effective policy while still insuring your home and its contents for the proper value. Contact us today for your free, no-obligation quote.