Homeownership comes with unexpected expenses, even more so if your property is priced in the high-end market. However, that does not seem to affect the current luxury home sector, as price tags range from $1.5 million to $2.2 million.
Realtor.com says luxury home prices are skyrocketing, and well-heeled owners are not even batting an eyelid at scoffing $4.5 million on a West Palm Beach home.
From bespoke fittings to one-of-a-kind outdoor entertainment areas, these mod cons do not come cheap. Purchasing the right home insurance for your luxury home and its items can be the difference in whether you are covered should an unfortunate event occur.
What is the Difference Between Luxury Home Insurance and Standard Home Insurance?
Luxury home insurance applies to any home valued at $1 million and above. Standard market insurance is not enough to cover the shortfall, as high-net homeowners require unique coverage.
Replacing luxury finishes and high-end appliances can run into millions of dollars. Here is where luxury home insurance differs from standard insurance. It is designed to fill coverage gaps.
Below, we will discuss ten expert tips for luxury house insurance.
1. Do Your Research
Because luxury home insurance is more nuanced than standard insurance, it requires more than a simple online search.
Consult your insurance broker or compare quotes via an insurance website. You can get a quote within 60 seconds.
Do not be afraid to ask questions, no matter how trivial and ensure your insurance company has your best interest in mind when presenting you with policy choices.
2. Carefully Read Through the Policy
Many homeowners make the mistake of not reading their policy with a hawk’s eye. And it is not just a matter of going through the wording. You must understand the coverage you are getting and specific policy details.
Know what the policy means, the scope of coverage, and how it protects your home and belongings. Also, pay attention to the fine print; sometimes, the small details make a big difference.
3. Higher Coverage Limits for Luxury Home Insurance
Bankrate advises your insurance policy to cover your home and personal belongings at their replacement cost value on an open perils basis. This means that all losses not explicitly excluded are covered.
Inquire about getting higher coverage limits for valuable items and additional benefits with your extra living expenses coverage.
4. Policy Benefits
Reputable, high-value home insurance companies usually throw in a few perks or extra benefits to attract more clients.
Depending on the insurance provider, this could entail free home appraisals, cash settlement options for total losses and deductible waivers for certain claims.
Another perk is access to dedicated customer service. Policyholders are assigned a concierge or personal representative. This person files claims on your behalf, schedules appraisals, hires contractors and books hotels if you need to use your loss-of-use coverage.
There are smart ways to reduce your home insurance premiums, says Hippo. For example, installing smart home devices can cut your premium by as much as 15%.
5. Specialty Coverage
While standard policy limits are fixed, specialty carriers offer flexible policies that allow you to choose your desired coverage amount.
Specialty coverages are tailored to your risk profile and regularly updated, ensuring you are adequately covered. These coverages include but are not restricted to:
- Guaranteed Replacement
- Global Travel Coverage
- Cash Settlement
- Jewelry and Collections
- Temporary Housing
6. Bundling Policies
Savvy homeowners usually bundle their policies to simplify and streamline insurance management and save cash.
Insurance companies sometimes offer multi-policy discounts to clients who bundle their insurance as an incentive, says Fancy House Design.
7. Replacement Costs on Household Contents
Standard policies cover personal belongings at actual cash value, but homeowners can choose replacement cost coverage for their personal property.
Yes, it will increase your monthly premiums, but this cover will pay to replace items, excluding their depreciation.
8. Umbrella Coverage
Umbrella coverage goes beyond normal home insurance. It is extra liability insurance and ensures a security layer if there is a chance of you being sued. Umbrella coverage protects against libel, vandalism, slander and invasion of privacy.
If your net worth exceeds your policy’s liability limit, you can purchase an umbrella policy to protect your assets for an additional $5 million.
9. Renovations that Impact Your Home Insurance Premiums
Renovations contribute to curb appeal and home value. In some cases, they can increase your liability risks and your premiums.
Let us say you have had a swimming pool built. The good news is that it instantly increases the value of your home. The bad news? If it has a diving board or slide, your insurer could insist on carrying higher liability coverage or purchasing an umbrella insurance policy.
With the WFH trend growing steadily, many businesses have sold their premises. Some company owners have moved their operations to a home-based business to save on the homeowners insurance cost.
This may require you to buy an endorsement to increase coverage on business-related assets or a separate home business policy that provides liability cover for workplace injuries.
10. Evaluate Your Home’s Worth
The luxury home market continues to either fluctuate or increase. With this in mind, be aware that homeowner’s insurance is based on the rebuild cost of your dwelling and not its market value.
In a worst-case scenario, you must have sufficient coverage to rebuild your home after a total loss.
Insurance companies value your home based on market price, location, educational district and additional nearby amenities. The insurance valuation represents the cost of rebuilding your home.
For an accurate estimate, it is best to use a tool that calculates replacement value so you know you are not being short-changed.
Final Thoughts
You have finally bought your dream luxury home, whether a new build or a renovator’s dream. However, you cannot control what life or Mother Nature throws at you. And nobody likes starting from scratch. But it is a reality for many homeowners.
Comprehensive luxury home insurance gives you peace of mind and ensures that everything is covered instead of finding yourself out of pocket.
Do your research and compare several policies. Do not be afraid to ask questions like higher coverage limits and homeowners policy benefits. Find out what you can do to bring down your premiums. Is it better to bundle your policies? What about umbrella insurance coverage?
By choosing the right homeowners insurance cover, you will be ensuring your biggest investment is taken care of, meaning you can sleep tight at night.
