Recently our firm has had the pleasure of placing coverage on an influx of high value homes and high value seasonal homes. In the world of property insurance, high value residential property usually represents a replacement cost of over $1,000,000 but the sky is the limit; last week we wrote a seasonal home for $12,000,000 and another for just under $16,000,000 replacement cost. What characteristics set high value homeowners policies apart from normal homeowners insurance? Read on to find out.
Appraisal / Risk Management Report
To ensure there is sufficient coverage in place, the insurance company or underwriter at risk will usually arrange for an appraisal firm to perform a building evaluation. In addition to the evaluation, the person performing the appraisal may make recommendations to reduce risk such as moving combustibles away from potential sources of ignition or fixing items such as missing or broken railing, installing more smoke or carbon monoxide detectors, etc. As a homeowner it is perfectly normal to get a bit frustrated with these recommendations, but try to remember that the purpose of these suggestions are to help protect your property and ensure safety of your family.
Higher Limits of Insurance
High value homeowners’ policies generally have higher limits of insurance across the entire policy including jewellery and fine art. Some policies include accidental breakage. If you feel these limits are inadequate, additional coverage can be purchased. Also, on some high value homeowners' policies extras such as sewer backup or water escape may be automatically included. It’s important to carefully read your policy, and ask your broker about any questions or concerns.
Basis of Settlement
If your home were to be a total loss and have no intention of rebuilding on the same site, you may wish to ask about an insurance company that will cut you a check for the full value of your insurance claim so you can move along with your life at a new location.
Kidnapping, Home Invasion, Ransom
This may sound like something out of the latest Hollywood action thriller, but insurance products do exist as add on to your high value policy to protect you and your family. Depending on your insurance company, in the event you or your family members is kidnapped while at home or on vacation in another part of the world, your own private crisis management team can be on site anywhere in the world usually within a matter of hours. Depending on the insurance company, the crisis management team sometimes perform “money drops” to pay ransom and facilitate other things of this nature to ensure safe return of the hostage. This coverage is usually extremely cost effective, usually around $80 per year as optional coverage.
This coverage can usually be included for an additional premium. Some policies will cover resulting damage to valuable property; for those of you with expensive wine collections, depending on the policy, coverage may respond to repair a damage wine refrigeration unit and any spoilage to your collection. We have a client with a large home and most everything is controlled via touch pads and a sophisticated computer system- The heating and cooling, entertainment systems, the alarm, etc. His hot water boiler burst and moisture entered the computer system. Guess what? His policy did not cover damage to “change in humidity or moisture.” Thankfully this client purchased equipment breakdown coverage when it was offered to him and over $120,000 in computer repairs to his home were paid out by the insurance company.
Higher Optional Deductibles
Some of our clients are in the position to enjoy reduced annual insurance premiums by selecting higher deductibles. On high value homes, many of our high net worth clients carry $10,000-25,000 deductibles or even higher, and as a result, pay less every year for their insurance. Some insurance companies will even waive your deductible should your claim exceed a certain amount (usually around $50,000) which is quite easy to do on some of these high value homes.
This column is intended for entertainment / informative purposes only and is not intended to act as a substitute for seeking the advice of a licensed Insurance Broker or other qualified professional.