Home insurance protects your home from hazards and threats alike. But for those with homes valued at over $1,000,000, you may be shocked to learn that your insurance policy might not completely protect the home you’ve worked so hard for.
If the market value of your home is worth more than what your current policy is willing to cover, you could be forced to pay for repairs out of pocket, even in the event of a disaster. The gap between what your current policy covers and what your home is actually worth can be offset by high-value home insurance.
Is Your Home Properly Insured?
Your home is one of your greatest assets and a significant long-term investment. As such, it’s vital to protect your home and its contents with adequate homeowners insurance. High-Value home insurance offers financial protection in the event of an unexpected disaster or accident involving you, your home, or your personal property.
So how do you determine if you have the right coverage for your high-value home? By reviewing each form of coverage included on your policy to make sure you are adequately insured for your specific risks. Here are some coverage elements to be on the lookout for:
- Dwelling Coverage refers to the portion of your home insurance policy that can offer compensation for the cost of repairing or rebuilding the physical structure of your home if it gets damaged or destroyed by a covered event. With a high-value home, make sure you have enough coverage to compensate for the full cost of rebuilding your home in the current market—including construction expenses.
- Other Structures Coverage can help cover the cost of repairing or rebuilding any detached structures on your property (e.g., a shed or fence) if they get damaged or destroyed by a covered event. Similar to dwelling coverage, it’s crucial to ensure that you have enough other structures coverage to compensate for the full cost of rebuilding any of your detached structures.
- Liability Coverage is the part of your policy that can offer compensation for the expenses that may result if you are found liable for injuring another person or damaging their property. With this, you may even want to consider purchasing personal umbrella insurance, which can provide additional compensation if your liability coverage is exhausted following a covered claim.
This isn’t a comprehensive list but outlining potential policy elements is a great first step towards understanding your coverage. Next, you’ll need to determine what other coverage compliments your policy and works best for your needs.
What’s Not Covered With Basic Home Insurance
Even the most comprehensive policy will potentially need additional coverage and protection. Typically, home insurance coverage does not apply to damage caused by flood, surface water, water that backs up through sewers or drains, earth movement, nuclear damage, war, etc.
Other potential protections you may need are:
- Flood Insurance: A standard homeowners policy does not cover damages from flooding. A separate flood policy is needed to cover losses to your property caused by flooding, which provides coverage for things such as:
- Structural damage
- Furnace, water heater and central air-conditioning
- Flood debris clean up
- Electrical and plumbing systems
- Underground Service Lines Coverage: Underground service lines coverage is typically not included in a standard homeowners policy. Utility companies may offer coverage, but these options can be costly and might only cover one utility line, as opposed to everything running under your property. And though “winter weather” isn’t a phrase you often hear in Houston, after the freeze last year ensuring that frozen pipes are protected and your home is ready for the winter months is a high priority.
- Fine Jewelry Insurance: Most Homeowners Insurance policies have stringent limits on coverage of valuables which can be as little as $1,000 of jewelry. If you own fine jewelry or other high-cost valuables, it’s worth it to invest extra protection for any goods you treasure.
Know What Coverage is Best For You
The best time to learn about what’s included in your home insurance policy is before you have a claim. To be sure you have the right coverage for your high-value home, a complete review of your policy is needed to determine how much of your home value is covered and what perils are insured against.
In order to select the best coverage that meets your specific home insurance policy needs, follow these steps:
Create a home inventory checklist of all of your belongings and their original value, as well as an estimate of their current value. This practice will help you better determine which coverage offers the best protection for your unique belongings. Talk to your broker about which high-value items—such as jewelry, collectible items, or fine art—require specialized coverage.
Calculate how much it would cost to rebuild your home if it were completely destroyed. Include added costs for labor, materials, and any new or updated building codes in your community that you would be required to comply with. Avoid making a rough estimate for this cost—be as specific as possible to ensure you know just how much coverage you need.
Analyze your personal risk. Be sure to select a coverage option that fits within your budget, risk profile, and comfort level.
Get a Free High-Value Home Insurance Policy Review
At Pasadena Insurance Agency, we can help you identify your risks and explain what type of homeowners insurance policy you need. Contact us today to learn how we can help you insure your high-value home, auto, business, and life.
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