What Is High-Value Home Insurance?

Definition & Examples of High-Value Home Insurance

Family in backyard of a high-value home
•••

 Klaus Vedfelt / Digital Vision / Getty Images

High-value home insurance refers to a special type of homeowners insurance for houses that have a market value of $750,000 or more.

Learn how high-value home insurance works through an example, what it covers, and whether you need such a policy.

What Is High-Value Home Insurance?

High-value home insurance is a type of homeowners insurance that is designed for homes with high market value. A high-value home is defined as property worth $750,000 or more. Homes that fall into this group might include heritage homes, or homes with special architectural or interior design elements. Of course they may simply be your standard mansion. This type of insurance is a full package of coverages and is one of the most comprehensive you can buy. High-value policies provide much better coverage than a standard homeowners insurance policy.

High-end home insurance isn't only for houses. You can purchase this type of policy for high-value condos as well.

How High-Value Home Insurance Works

If you have an above-average priced home, standard forms of home insurance that provide "average coverage" may not be enough to protect or replace your property if you file a claim. To ensure that your policy limits are high enough to avoid paying large amounts of money out of pocket, you may want to think about buying high-value home insurance.

Will Standard Home Insurance Be Enough?

Though the details will vary by the terms in your contract, a standard homeowners insurance policy covers a wide range of costs that might occur in the course of owning a home. At the most basic level it pays for the cost to repair or rebuild the structure of your home if it is damaged. It will also replace the items within it if they're taken or destroyed. (Claims of this nature will factor in depreciation in the value of your items, and any payouts will reflect this.) It funds lawsuits that a person might bring against you, due to bodily harm or damage to others' property, so long as the cause relates to your home. Lastly, it covers any extra costs you might incur for living away from home while your home is being repaired, such as for a hotel or home rental.

How Does High-Value Home Insurance Differ?

Most high-value home insurance policies provide all the coverage offered by a standard home insurance policy, but with higher limits and extra coverage for the unique needs of people who own pricier homes (and items within those homes).

For example, let's say that John and Jane are next-door neighbors. Both have high-end homes with period features including ornate wall carvings. Both homes have a current market value of $750,000. John has standard homeowners insurance with a structural coverage limit of that same amount. Jane has a high-value home insurance policy featuring a built-in guaranteed replacement cost coverage.

A major fire occurs on their street, and both John and Jane's homes have to be rebuilt. Because the homes have features and materials that are hard to replace, the actual cost to rebuild each is $850,000. John's policy doesn't cover more than the stated limit, which leaves him $100,000 in the hole after it is built back to its former glory. In contrast, Jane's policy comes with the extra feature, so it would cover the full cost of work, even if it exceeds the coverage limit.

What Does High-Value Home Insurance Cover?

The most common reason for choosing to purchase high-end home insurance is expanded coverage limits compared to standard homeowners insurance policies. But it can also include a wide range of extra perks or add-on services.

Compared to standard home insurance, a high-end policy includes larger policy limits or enhanced coverage for the following:

  • Structural repair or replacement: Structural coverage for standard homeowners insurance may be limited to the cost to rebuild the home. If you think the true cost to build your home back to the state it was in before damage occurred will be higher than what is stated in the contract, you'll need to get extended or guaranteed replacement cost coverage. This is often an add-on or a rider that will cost you more each month. In contrast, many high-value home insurance policies include extended or guaranteed replacement cost coverage as part of the package. This will allow you to rebuild your home to its former state, even if the cost of doing so exceeds your stated limit.

The guaranteed replacement cost option covers the full cost of rebuilding the property, no matter how much it exceeds the coverage limit. Extended replacement cost is a more modest option that covers any costs that exceed the limit up to a certain percent.

  • Possessions: High-value home insurance affords higher limits for items like money, jewelry, art, antiques, or even business items kept at home. If you only have a standard policy, it often costs 10% more to insure your personal belongings at the cost to replace them, versus the true cash value. And if your claim is based on the current cash value of your items, it will pay out less for older items than you first paid for them. High-value home insurance most often insures your items at the replacement cost, rather than at the current value, which will give you a bigger payout.
  • Liability: High-value policies often include higher limits for personal liability, medical payments, and loss assessments. They also often cover costs if you need to defend against claims of slander, libel, or defamation.
  • Additional living expenses: You'll often enjoy much higher coverage limits for living costs you incur while waiting for your home to be restored. This might include hotel stays, meals, or laundry.

Some high-value home insurance policies also provide niche coverages that are not often offered by standard policies. This includes things you may not even think of if you suffer home damage, such as the cost to replace locks if your keys are stolen, or to protect against identity theft, or the cost to replace food that has spoiled due to an electric outage. It may even cover the costs from kidnap or ransom, and legal defense fees.

Having coverage for living expenses while your home is often a major asset. Many high-end home insurance policies cover the costs needed to meet your former comforts. If your standard of living aligns, you can even stay in a high end hotel with all the perks while you take the time to hire the right architects and builders to restore your home just as it was before.

Do I Need High-Value Home Insurance?

Not every dwelling needs high-end home insurance. This type of coverage is specifically designed for houses that will cost a great deal to reconstruct or repair, or if the items in the home are one of a kind and hard to replace.

High-value home insurance might be a good choice for you if any of the following are true.

  • Your home is worth $750,000 or more
  • Your home is a heritage home
  • Your home has older construction features not found in common methods or practices
  • Your home has unique architectural features
  • Your home uses materials that are hard to replace
  • You own expensive or priceless fine art, rugs, collections, jewelry, wine, or other items that are kept at home
  • You chose high-end appliances or fixtures that can not be found at standard stores
  • The interior and exterior design features are unique, such as luxurious outdoor living areas, guest houses, swimming pool areas, custom landscaping, or bespoke features that were created by an interior designer

How Much Does High-Value Home Insurance Cost?

High-end homeowners insurance policies will cost more than standard versions because of their increased coverage limits and top-of-the-line personalized experience. This also means that owners of high-value homes need to budget for higher premiums each year. In 2018 (the latest data from the Insurance Information Institute), homeowners in the U.S. paid on average $1,249 in annual premiums for standard home insurance. You can bet that a high-end policy will be much higher.

That said, there are many ways to reduce the price you pay for insurance, no matter the type you choose.

  • Get multiple quotes: Shop around with the major insurers in your state to get the best rate.
  • Choose a high deductible: The insurance deductible is the amount you pay before your insurance coverage kicks in. Opting to pay more out of pocket when you file a claim is a common tradeoff for lower premiums.
  • Bundle your homeowners and auto insurance: Buying both policies from the same insurer can save you anywhere from 5% to 15% on premiums.
  • Look for discounts: Some insurers offer discounts for retirees, or for employees or members of certain organizations.

Key Takeaways

  • High-value home insurance is a special type of homeowners insurance designed for homes worth $750,000 and up.
  • It provides higher limits on coverage than standard policies, plus extra types of coverage for the unique needs of people who own high-end homes.
  • This type of insurance can run you more than $1,200 per year, but you can lower your costs by shopping around and looking for deals and discounts.