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What is high value home insurance?

Fact-checked with HomeInsurance.com

A basic home insurance policy provides coverage for the physical structure of your house and other structures on your property. If you live in a moderately priced home that is built with standard construction materials, the coverage limits of a basic policy will likely be adequate. But if your house is worth millions and you need a higher amount of coverage, a high-value home insurance policy is a better option. 

What is high-value home insurance?

A high-value home insurance policy is a type of home insurance that specifically covers expensive homes. But it’s not the purchase price of the house or the cost of the land it sits on that indicates a home’s value. The value of a home is determined by the amount of money it would cost to rebuild it based on its original condition. This is also known as the replacement cost, and it accounts for both the exterior and interior of the home.

What makes high-value home insurance different from other types of policies, is that the coverage limits are much higher than a standard policy. Not only do you get more coverage for your dwelling and personal belongings, but you also see increased limits for things like valuables and jewelry, liability coverage, landscaping coverage, and guaranteed replacement cost coverage. 

Many high-value home insurance policies also have unlimited coverage for additional living expenses. That means if your home is damaged or destroyed by a covered event and you have to temporarily move out, your hotel, food and general living expenses are covered without standard limits. 

However, not everyone can qualify for high-value home insurance. After you apply, someone from the insurance company will visit your home and do an on-site inspection to determine the replacement cost, and how much coverage you’ll need before determining if you qualify. In the next section, we’ll discuss ways to determine yourself if you might have a high-value home.

Do you have a high-value home?

If you believe that your home is worth $750,000 or more, your home falls into the high-value category. Also consider the build of your home. If you hired an architect to design it, or have a historic home, it’s probably high-value. Green homes with eco-friendly technology and features usually qualify for luxury home insurance as well.

You should also consider what you have inside your home. It’s likely that you qualify for high-value home insurance if you have valuables like jewelry, art, furs, coins and even fine wine in your home. High-end appliances can also qualify. Guest houses, pools, and backyard fixtures are also elements of a high-value home and help you qualify for the insurance you need.

How much coverage do you need?

If your home is damaged or destroyed by a covered peril, your home insurance policy will compensate you for the losses in one of two ways—actual cash value (ACV) or replacement cost value (RCV), depending on your policy type. With ACV policies, you receive a payout for the loss, minus depreciation. With RCV policies on the other hand, you receive a payout for the full cost to rebuild your home to its prior condition.

With a high-value home insurance policy, it’s better to have RCV coverage. It costs more money up front, but you get significantly more coverage, which means you pay less out of pocket if you have to file a claim. If you have an ACV policy, there’s a good chance your payout won’t cover the full cost of the damage, which means you would have to pay money out-of-pocket.

When you buy high-value insurance, you should also consider purchasing contents insurance to cover your personal belongings—especially if you keep valuable items in your home that exceed coverage limits. For valuable collections or antiques, you could consider purchasing a scheduled personal property endorsement.

What to consider before getting high-value home insurance?

If you’re thinking about getting a high-value home insurance policy, there are a few things you should consider. First, the cost of these policies is generally more expensive than standard policies. That being said, you’re getting a lot more for the cost.

With high-value home insurance, you’re protected by significantly more coverage, as well as a variety of add-ons, like a free home inspection, guaranteed replacement cost coverage and unlimited additional living expenses coverage, to name a few. Typically, companies that specialize in high-value home insurance policies also have excellent customer service, which can be hard to find with a regular provider. 

Additional coverages to consider

When you purchase luxury home insurance, you’ll have the option to select add-on coverage for specific things in addition to the included covered perils. Add-on policies allow you to customize your coverage, so you can get the protection you really need. Here are some of the additional coverages that can be beneficial for someone with a high-value home: 

  • Identity theft coverage: Identity theft coverage will help monitor your personal accounts for suspicious activity, and help pay for identity restoration services if your information is stolen.
  • Water backup coverage: Many high-end home insurance policies include optional water backup coverage, which pays for sewer and sump pump issues.
  • Loss assessment coverage: If you belong to an HOA, and you are assessed for a certain loss, loss assessment coverage will pay your portion of the cost.
  • Family protection coverage: Family protection coverage protects your family members from certain losses, or reimburses expenses in the event of hijacking, abduction or stalking.
  • Business property coverage: If you keep items in your home that you use for work, business property insurance will cover them.
  • Computers coverage: Computers coverage includes higher limits for computers in the event of a loss.

The takeaway

  • If your home is worth more than $750,000, you likely qualify for high-value home insurance.
  • High-value home insurance comes with higher coverage limits to protect your most valuable assets.
  • This type of insurance is more expensive than standard insurance, but it comes with unique perks and coverages.

People who live in ultra-expensive homes usually benefit from a high-value home insurance policy as it offers higher coverage limits, unlimited additional living expenses coverage and a slew of add-on coverages. 

Not to mention, insurance companies that specialize in high-end homes usually offer top-notch customer service. You’ll pay a premium for high net-worth insurance, but the perks and customization are attractive, and you could save a significant amount of money if you have to file a claim down the line.

Elizabeth Rivelli

Elizabeth is an insurance writer for coverage.com, where she covers insurance providers and reviews policies to help consumers find comprehensive and affordable coverage for every area of their life. She has more than three years of writing experience for top online insurance and finance publications.

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