High-Value Home Insurance for High-Net-Worth Individuals

If your house is worth more than $750,000 or more, you almost certainly want to consider getting high-value home insurance (HVHI). This is a high-net-worth category of home insurance specifically designed to protect particularly expensive properties, high-value personal assets and other assets with a large risk exposure. Typically, an insurance company will direct you to the coverage that you need. If the property is valuable enough, the insurer will issue a high-value policy.

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What Is High-Value Home Insurance?

High-value home insurance is a form of homeowner's insurance for especially valuable properties. In terms of coverage, HVHI largely offers the same protections as a standard homeowner's policy . Among other essentials, this insurance will generally cover:

• The structure and the land
• Assets inside or on the property
• Personal liability associated with the property

So let’s say, for example, your house accidentally catches fire. Your homeowner's insurance will either pay for the reconstruction or issue you a check for the value of the destroyed property. Before this happens, you may want to consider whether your policy covers the cost of replacement and reconstruction rather than reimbursement for the home's listed value.

The difference with high-value home insurance is that it covers expensive or valuable properties. What constitutes a "high-value" property differs between insurance companies . Some consider any property worth more than $750,000 to be high-value, while others put the cutoff as high as $1.5 million.

While the coverage that an HVHI policy offers is broadly similar to standard insurance, these policies can include some elements specific to a high-value property. For example, a high-value policy might offer coverage for particularly valuable assets like art or jewelry, which is called an “endorsement.” They might also include parts for home security systems, and will sometimes include coverage that is nonstandard for a homeowner's policy like protection against water damage, business interruption or financial crimes.

High-value policies are typically more expensive than an ordinary insurance policy, and significantly so. These policies also offer much higher coverage limits than a standard homeowner's policy, though. They are distinct from the similarly-situated umbrella insurance policies in that high-value home insurance is a primary policy. It covers all losses up to the policy's maximum, while an umbrella insurance policy only offers coverage once an underlying policy is exhausted.

Who Should Use High-Value Home Insurance?

Anyone with a high-value property (often referred to as a "luxury home") should consider getting a high-value policy. Beyond that, households with significantly valuable assets like art, cars or jewelry might consider expanding their policies. The same could be true of households worried about specific areas of loss, such as a risk to business operations.

For instance, say that you are an artist with an in-home studio. Your work can sell for hundreds of thousands of dollars per piece. In this case, you might want home insurance that can cover the potential market value of your pieces, rather than a standard homeowner's policy which typically will not protect speculative value. Often, this will mean seeking out a high-value insurance policy.

A high-value policy isn't good for just covering the raw value of your house but for protecting you in the case of specialized claims. It might cost a lot of money to restore your home the way you want it, for example. You might have significant losses in the case of fire or break-in beyond the structure, or you might run your business out of a home office and lose business income while making repairs. In all cases, you would want a policy that has both the coverage limits and the protection you need.

In addition, when the value comes from the underlying property or home itself, you will typically not have an option about purchasing high-value home insurance.

When you insure your home, an insurance company will consider the overall value of the policy you're looking to buy. This will involve the value of the property itself, as well as the assets you're looking to protect, the liability insurance you want, and all additional coverage. If the collected value of the policy exceeds a certain amount, the company will consider this a high-value policy. In that case, the company will either issue a specific HVHI policy or it will refer you to an insurer who can write that coverage.

Bottom Line

High-value home insurance is a specialized form of primary home insurance designed for particularly valuable properties or high coverage caps. Not all insurance companies offer these, but most will direct you to either the policy or provider that you need based on the coverage that you're looking for.

Tips on Selecting Insurance

• A financial advisor can help you pick an insurance policy that fits into your overall financial plan. Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now .
• Homeowners need comprehensive protection, but renters shouldn't ignore their own needs. If you rent your home, look at these five tips for keeping yourself protected .

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