If your home is damaged or destroyed, homeowners insurance makes it possible to repair or rebuild it without paying out of your pocket. A standard homeowner’s insurance policy covers the physical structures of your home plus its content. That means the policy will protect you if you suffer a burglary or damage to the property by an act of vandalism, natural disaster, or accident.

But like all insurance policies, homeowner’s insurance has policy limits. That is the maximum you can expect the insurer to pay you for a particular loss. The policy limit for homeowner’s insurance depends on the replacement cost of the home; what it would cost to replace it. The average value of homes in the area determines the policy limit for most standard homeowner’s policies.

That is fine as long as your home is like the average home in your neighborhood, cost wise. But if you own an expensive home, the standard homeowner’s insurance policy might not be enough, warns WRents.com. That’s because the policy limits of standard homeowners insurance mean it cannot pay you enough money to fix or rebuild your home if it becomes necessary. That would defeat the whole purpose of buying home insurance.

That is where high-value home insurance comes in. What is high-value home insurance, and do you need it for your property?

What is high-value insurance?

High-value home insurance is a unique type of homeowner’s insurance designed to cater for the needs of high-value homes. A high-value home is any home with a replacement cost of $750,000 or more. This amount represents how much it would cost to rebuild the house to its original condition if it gets destroyed. Some insurance companies use $1,000,000 as their baseline, but $750,000 is the standard cut-off for high value-homes.

This replacement cost is not based solely on the cost of rebuilding the home’s physical structures and primary systems. It also includes the cost of the finishing, cabinetry, roofing, built-in appliances, and lots more. If a home has custom features or expensive content that will cost a lot of money to replace, there is a good chance it will need high-value home insurance.

What is included in high-value home insurance?

1.      Higher coverage limits

Naturally, high-value home insurance offers broader coverage than the standard homeowner’s policy. Any losses not excluded by a high-value home insurance policy are assumed to be included in the policy. Most high-value insurance policies include guaranteed replacement costs. That is an assurance that the policy will not only pay the replacement cost of your home but will do so even if the costs exceed your policy limits.

2.      Cash settlement

With a high-value insurance policy, it is not compulsory to rebuild your home with the money you get from the insurance policy. You can take the cash and build the home elsewhere or spend it on something entirely different if that is what you want.

3.      Enhanced coverage for possessions

Policyholders also enjoy higher coverage limits for personal items. These include cash, art pieces, jewelry, antiques, and heirlooms. The policy may also cover items used for your business that are kept in your home. High-value home insurance may also include coverage for identity theft.

4.      Higher limits for personal liability

The base limit for personal liability is higher than the $100,000 typically available under a standard homeowner’s insurance policy. The liability coverage will also often include the cost of defending yourself against claims of slander, defamation, or libel.

5.      Higher coverage costs for additional living expenses

The coverage limits for living costs incurred when your home is under repair are higher under a high-value home insurance policy. Moreover, the insurance company will often book the hotel directly, saving you the hassle of filing for reimbursements. The covered costs may also include meals and laundry while staying at the hotel.

6.      Dedicated customer service

The insurance company will often assign you a devoted customer service assistant after buying a high-value home insurance policy. This person will handle most of the tasks that the policy needs. Examples of such tasks include filing claims, finding & hiring contractors, scheduling an appraisal, booking a hotel, and paying for it (if you need it while the home is undergoing repairs).

7.      Other benefits

Purchasing a high-value insurance policy will give you access to higher levels of expertise, care, automatic coverage for water backup, and landscaping.

Do you need high-value home insurance?

You need high-value home insurance if your home meets one or more of the following criteria:

• The home has a replacement cost value of around $750,000.
• The house is larger than the average home in your area, or it has custom features and expensive finishes.
• There are one-of-a-kind items in the home that are hard to replace.
• It is a heritage home or has unique architectural features.
• The property contains costly or priceless items.
• It has features that were made using unusual building techniques.
• It has high-end appliances that you cannot see in standard stores.