Why You Need Additional Insurance Coverage for Your High Value Home
Homeowners insurance is designed to protect your investment in your home. If your property suffers damage due to fire, burglary or another covered event, your policy can pay out money to you to make repairs or rebuild from the ground up, if necessary.
Standard homeowner's insurance policies cover a variety of risks, but you might need more than just basic coverage. Purchasing a high-value home insurance policy or supplementary coverage could make sense if you want to ensure your most valuable asset is protected.
When should you consider upgrading your homeowner's insurance policy? Here are a few scenarios when it may make the most sense.
Reason #1: You Own an Expensive Home
When purchasing homeowner's insurance, one of the most important considerations is the replacement cost of the property. Replacement cost is what it would take to rebuild your home exactly as it was before it was damaged. The more expensive the home, the higher your replacement cost.
If you live in a home deemed to be "high value," your insurance needs and costs may differ from those of a standard homeowner. You may need to consider high-value home insurance, which protects homes that are more costly than the average home.
Generally, a home is considered "high value" when it's worth $750,000 or more, though some insurers may raise the minimum threshold to $1 million. This type of coverage may be more appropriate for higher net worth homeowners. For perspective, the median home value of all homes in the U.S. was $428,700 as of the first quarter of 2022, according to the Federal Reserve Bank of St. Louis.
Examples of high-value homes can include:
- Custom-built homes
- Historic homes
- Homes that are architecturally significant in some way (such as a Frank Lloyd Wright home)
- Houses that feature high-end or unique building materials
- Properties that have been upgraded with a pool or other free-standing structure
- Condos or luxury apartments
A high-value homeowner's insurance policy is designed to offer coverage enhancements that wealthier customers might desire. Some policies, like Westfield's, offer guaranteed replacement costs, which could pay to rebuild your home regardless of the established value.
Reason #2: You Have Substantial Assets to Protect
Homeowner's insurance can cover the structure of your home, but that's not the only thing it protects. Your policy can also cover your personal property and offer liability protection in case someone is injured on your property. In a standard policy, coverage for personal effects is usually 50 to 70 percent of the insurance on the home's structure, according to the Insurance Information Institute.
If you keep assets of substantial value in the home, such as collectibles, antiques, jewelry or firearms, then a high-value home insurance policy may be necessary to ensure they're protected against losses related to theft or damage. High-value homeowner's insurance can also expand the circumstances under which they're covered.
With an open perils policy, for example, any losses not specifically excluded would be covered. So if something unforeseen happens and your antique coin collection is damaged, your high-value policy would pay the replacement cost back to you.
You may also consider expanding your homeowner's insurance to increase your protection against personal liability. An umbrella or excess liability policy can provide liability coverage beyond what's covered by a standard or high-value homeowner's policy. Typically, you'll need to have a minimum of $300,000 in underlying liability insurance on your standard policy to get an umbrella or excess liability policy.
Reason #3: Your Home Faces Unique Risks
Increasing your homeowner's insurance could also make sense if your current policy doesn't include coverage for certain risk factors. Some of the things standard home insurance may not protect against include:
- Flood damage
- Damage related to water or sewer backup
- Termite or other pest-related damage
- Mold unrelated to a covered event
- Identity theft
- Business property that's stored or located in the home
If you live in an area prone to flooding or earthquakes, you may need to purchase separate home insurance to cover damage from those events. Meanwhile, a high-value home insurance policy could protect you against certain events not covered by a standard policy, such as identity theft, damage to business property or landscaping. Note that in most cases, no homeowner's policy will cover termites or mold not caused by a covered peril.
Having the Right Coverage Matters
Homeowner's insurance won't shield your home from damages, but it can provide you with financial peace of mind if the worst happens. Reviewing your home insurance regularly is important to understand what's covered and where gaps in your policy may need to be filled.
Westfield offers solutions for owners of high-value homes, including the option to insure both your home and your vehicle in the same policy. If you're interested in increasing your homeowner's insurance, connect with your local Westfield agent today to discuss which type of coverage may be right for you.