What’s the Difference between Standard and High-Net Worth Homeowner’s Contracts?
We often get asked what kinds of benefits come with moving from a standard mass-market insurance contract into a High-Value homeowner’s contract? Though there are many things that set these contracts apart, let’s start with one fundamental reason:
High-Value homes are built different than other homes, plain and simple.
Multi-Million dollar homes are simply not meant to look like other cookie-cutter homes. From each properties’ unique development and design process to the intricate, custom features that can be found throughout, each home has a personality of its own.
These homes require a specialized type of insurance product, and our High-Net-Worth Insurance companies cater specifically to successful individuals and their High-Value homes. We’ve expanded on a few key differences below:
Replacement cost
Standard vs Extended vs Guaranteed Replacement Cost
- Standard Replacement Cost
- Caps the limit of coverage at what is listed on the policy.
- This can create some costly gaps in coverage
- What if your agent and/or company didn’t correctly value your home?
- Extended Replacement Cost
- Provides a listed percentage – Anywhere from 120% to 200% of the replacement cost listed on the policy.
- What if even this amount is insufficient?
- ie – California Wildfires caused shortages in labor and materials, which caused home rebuild costs to skyrocket in some cases by 3x – 4x.
- Guaranteed Replacement Cost
- Contract will pay to repair or replace the property with like kind and quality to return the property back to its pre-loss state.
- Strongest form of replacement cost coverage, offered by all of our High-Net-Worth carriers.
- No limits, no hassles, it will get rebuilt back to where it was prior to the loss.
Risk Management
High-Value home companies go beyond just writing an insurance policy for your home. In order to ensure your home’s replacement cost is valued appropriately and your property has the right protective measures in place, they will run virtual or in-person risk management inspections for their policyholders.
These inspections focus on documenting the unique features of your home as back-up in case they do need to be repaired or replaced, but also look closely to identify ways to prevent potential claims from happening in the future. They aim to make your home more resilient to loss, which improves your overall risk profile and minimizes your total cost of risk.
Broader Contracts
Without diving into all of the nuances of contract language, not all insurance contracts are created equal. It’s extremely important to understand the two fundamental ways insurance contracts are set up:
1.) Policy provides a list of what is covered, everything else is excluded
2.) Policy provides a list of what is excluded, everything else is included
It’s important to note how much broader the coverage provided is under the second setup, which is how the High-Net-Worth contracts we offer are constructed. Weird things happen, and being in the insurance industry we can certainly attest to that. Very rarely are claims cut and dry, and the broader the coverage you can get, the better protection it can provide against unique claims scenarios.
Note: It’s important to read your policy and ask your agent how your contract is set up to know the potential gaps and limitations you may encounter.
Optional Coverages
Outside of coverage for your home and your belongings inside, there is a multitude of extra homeowner’s add-ons to navigate: Equipment Breakdown, Service Line Coverage, Increased Coverage for Mold, Loss Assessment, the list goes on and on.
Many standard companies simply do not offer the types of optional coverages available through a high-value home contract. Even if they do, the limits are far below what you can find in a High-Net-Worth contract. Better yet, what some standard companies consider ‘optional coverages’ are included in the base contracts for high-value homes for no extra charge.
Ease of Doing Business
When you have a claim, odds are you’re not having a great day. You’ve already got a full plate without adding the stress of navigating your way through an insurance claim.
High-Net-Worth carriers attract the top talent in the industry, and provide professional personnel who understand that your time is valuable. Their goal is to settle things equitably and to get your home and your life back to normal as quickly as possible to minimize the burden on you and your family.
Still Unsure? Let’s Review Together
Call us Today
We fully understand that not everyone is jumping up and down at the opportunity to read their insurance policy end-to-end. That’s where my team and I come in. We value your education above all else and want you to understand from a high level what your policy includes and how it will respond when you need it.
We take the time to run a comprehensive risk assessment on your current insurance program to identify potential gaps in coverage. We then market your policies and bring you an overview of the marketplace and recommendations to strengthen your program.
Don’t make a difficult process even harder on yourself: Give us a call to set up your no obligation review and to find out more about what company might be your perfect fit.
