A man’s home is his castle, but what if that home is an actual castle? Or a mansion on the water with an extensive art collection, Italian marble, and commercial grade appliances? High net worth clients, those with home values of at least $1 million and more than $1 million in investable assets, present unique challenges to independent insurance agents aiming to meet their personal insurance needs.
Fortunately, high net work clients have policy options that protect them well beyond what most carriers offer in standard homeowners policies. High value homeowners policies can include greater levels of coverages for more exposures than the typical homeowners policy. Plus, these policies are also commonly packaged with other coverages such as personal liability, flood, identity theft, and personal articles floater for items like jewelry and art.
More Money, More Problems
Identifying the proper coverages, and the potential exposures carriers need to know about, is trickier than a typical policy for a tract home in the suburbs. Carriers will likely require detailed information about the home and its contents to rate it property and apply the necessary endorsements. While not an exhaustive list, high value homes could easily have property and features with replacement values well beyond the limits of a standard homeowners policy:
- Items in the House – antique furniture, fine art, designer clothes and accessories, jewelry, silver, and collectibles
- Specialized Areas – multiple kitchens, sound studio, basketball court, gym, guest house
- Fixtures and Finishes – commercial grade appliances, crystal chandeliers, custom cabinetry, imported stone or wood
Higher caps for these personal items and finishes are important features in high value homeowners policies. A standard homeowner policy often limit the cap on contents coverage at 50% to 70% of a home’s value, so higher caps are an absolute must for homeowners who could reach that cap just in their jewelry boxes. And while water damage from a leaky faucet might result in a loss of $2,000 to $5,000 in most homes, that same leaky faucet could ruin $100,000 of oriental rugs, hardwood floors and custom cabinets in a high value home.
One of the biggest draws of these programs is repair and replacement costs. Homes that qualify for this level of coverage typically have higher costs per square footage for repairs and replacement, so higher limits for such claims is desirable. Unlike most standard homeowners policies, high value homeowners policies usually provide full repair or replacement costs in the event of a major loss. If the homeowner does not want to rebuild after a total loss, a high value homeowners policy will likely will pay out the replacement cost in cash, which is another option typically not available in standard policies.
Before agents let their high net worth clients settle for a standard homeowners policy, it’s worthwhile to ask a wholesale broker for options that can protect more than just the home. Atlantic Specialty Lines has access to several personal lines markets that offer products with extensive coverages for high value homes as well as auto, private collections, and personal excess. These products offer protection high net worth clients seek, including, sewer or drain backups, damages by domestic pets, contents replacement, landscaping coverage, additional living expenses, and cash settlement options.