Only about 6% of homes in the US are worth more than half a million dollars, and even fewer are considered high-net-worth homes. With expensive homes like these, how should homeowners insure them? There are a lot of considerations to keep in mind when buying insurance for expensive homes. Read on for an in-depth look at everything you need to know about high-net-worth homeowners' insurance.
What Counts as a High-Net-Worth Home?
For most insurance carriers, any home worth $750,000 or more counts as a high-value home. For some carriers though, that designation only belongs to homes above $1 million. Homes this expensive typically belong to High Net Worth Individuals or HNWIs. HNWIs typically have a net worth, including their home, of $1 million or greater.
With this increased wealth comes a lot of benefits, but there are also some struggles and difficulties that are good to be aware of. This is especially true when it comes to buying a home and keeping it safe. That is why both homeowner's and personal insurance are so important for people and families with lots of assets. You need to ensure that you can recover your valuable home and possessions should anything happen to them.
Why Do You Need High-Value Homeowners Insurance?
The first question you might ask yourself is, "Isn't regular house insurance good enough?" In many cases, no it isn't! There are several reasons why HNWIs should look into getting homeowner's insurance that goes above and beyond regular house insurance. Many insurance companies actually offer specific insurance policies for these expensive homes that are designed with these extra considerations in mind.
First of all, your home's value is obviously higher than most homes if it's a high net worth home. This means you stand a lot more to lose in the case of damage or destruction. Things like fire, flooding, and other natural disasters can affect a home no matter its value, but you need to make sure you're able to recoup your money.
Even with a security system for your home, you also have to consider the potential loss of your valuables. Individuals with enough assets to buy a house like this are often able to buy other things like nicer cars, jewelry, and electronics. Does your regular homeowner's policy cover things like these?
And you may not have even considered other valuables; many people have expensive collections and hobbies, and they want them to be adequately covered. A policy designed for people with a higher net worth can often take care of even things like your coin collection or your antique model trains.
Don't make the mistake of thinking, "It can't happen to me!" Things can and do happen to everyone, and being prepared ahead of time is one of the best ways to deal with it. That's why getting the right insurance policy for your needs is so critical.
What Should Your Insurance Include?
As you might have guessed, a good homeowner's insurance policy for a high-value home will cover quite a bit more than the average policy. It's important to take a close look at everything that your policy covers, and maybe even consider swapping to a new insurance provider.
You want your homeowner's insurance to cover several key things. The first of them is the value of the home itself, with enough coverage that you can rebuild or repair it if it gets damaged. You don't want to wind up footing the bill to fix your home because your insurance didn't pay enough.
You also want your homeowner's insurance to cover personal property inside the home. This can include your clothes, furniture, collectibles, antiques, electronics, and anything else that costs money to replace in your house. If your basement floods, you want your insurance to help you buy back everything that got damaged.
Some high-value home insurance policies will cover all the objects in the home, but others won't. You want something that covers everything, if at all possible! But even if your house policy won't cover personal belongings, you can get a separate policy just for your belongings and valuables to make sure you're protected. It's even better if you can get insurance that also covers your living expenses for a time in case of a disaster. Replacing your things is all well and good, but you'll need a place to stay and food to eat if your house is damaged! That can get expensive, and good insurance can help you cover that.
What Other Insurance Should You Consider?
To go along with their homeowner's insurance, many HNWIs also get a few other types of insurance. This helps make sure that they're covered across all realms of life, helping keep them and their family financially secure.
One type of insurance you may not have heard of is called umbrella insurance. Umbrella insurance acts as a way to go beyond regular insurance and protect your assets, particularly against liability. If you find yourself in an accident or owing money, umbrella insurance can pay the difference and help keep the rest of your assets secure.
Life insurance is also crucial, particularly if you provide the family income. It's not always fun to think about, but these are the tough topics you need to face when you provide for your family. You need to ensure that if something happens to you, they can still live well and will have one less thing to worry about.
At the end of the day, you want to be safe and protected against future storms. Whether it's your car breaking down, a bad illness, or a fire in your home, it's important to have the appropriate insurance to take care of you when things go wrong.
Learn More About High-Net-Worth Insurance
Now that you know more about protecting your high-net-worth home, don't delay! You should get a good, high-value homeowner's policy as soon as possible to make sure you and your family are safe from harm.
If you'd like to learn more about insurance, or you'd like to get started on buying a policy for your family, contact us! We'd be happy to talk with you and find the best policy that suits your needs.