Not all homeowners insurance policies are created equal.
This is especially true as the replacement cost of your home increases beyond $500,000.
Sure, just about every insurance carrier can sell you a policy, but will that policy cover your unique needs? Maybe, maybe not.
Today we’re going to talk about three smart insurance coverages that every high-value homeowner, so those with homes that it would cost $500,000 or more to replace to rebuild, should consider that you won’t find on standard home insurance policies.
1) Guaranteed Replacement with Cash Out Option
The first coverage is guaranteed replacement cost with a cash settlement option.
When you purchase your homeowner’s insurance policy, your insurance professional should have sat down with you and explained the difference between replacement cost and actual cash value.
You absolutely positively should have a replacement cost policy. That’s not even really a discussion.
There then is a coverage extension beyond that called guaranteed replacement cost.
Beyond that, there is an additional endorsement that you can add called guaranteed replacement cost with a cash settlement option, or cash-out option.
The “cash-out” option means that if you decide that you don’t want to rebuild the home, you can cash out the value of that home and take it in a lump sum versus getting the cash in waves as you rebuild.
Now you may just want to rebuild and that’s perfectly fine. But the clients that I work with, understanding that their lifestyles change, their needs or goals change, the idea that they may have multiple homes… they may not want to rebuild the home after a loss.
Having the ability to cash out in a lump sum versus being forced to rebuild the home in order to recoup the value of the loss is a wonderful option and provides a nice layer of peace of mind.
I see this as a strategic advantage for high-value homeowners.
2) Extended Water Backup Coverage
Most standard homeowners’ insurance policies are going to come with low limits, $5,000 maybe $10,000 in water backup coverage.
If you have a finished basement, if you have stuff in your basement, if you have any type of office setting, movie theater, kids play area, a pool table could easily eat up the $10,000 limit if it’s in your basement.
If you have a fully finished, fully carpeted, you have custom a bar set up, maybe you have an art gallery… if water backs up into your basement from drains, sewers, any type of water removal piping or discharge, if water comes back up in your house and causes damage, that’s not covered on your policy unless you have water backup coverage.
And if you have low limits, you’re gonna blow through those limits pretty quickly.
Adding a coverage extension that’s going to give you higher limits, $25,000, $50,000 or above is something that you absolutely should consider.
Oftentimes these extensions do not cost very much in additional premium.
3) Unlimited Loss of Use
The third coverage that I want you to consider as a high-value homeowner is unlimited loss of use.
In the neighborhood that I live in someone shot off a firework that landed on one of my neighbor’s house and it actually burnt that home down, which is tragic on many levels.
But if that happens to you, you have to go live somewhere, right?
If a similar situation happens and you have that worst day scenario when now you can no longer live in your home, you’re going to have to go someplace.
And if you’re fortunate enough to have a second home, oftentimes if you have children or you have a business, living in that second home full time is not an option.
In this case, unlimited loss of use coverage provides you with the ability to go and take care of your family.
Pay for the additional expense that comes with the fact that you no longer can use your home. Many homeowners’ insurance policies, particularly standard insurance policies are going to have low limits that are not going to allow you to really continue your lifestyle while your home is being rebuilt.
The unlimited loss of use coverage extension is not particularly expensive but provides you with the peace of mind to know that you’re not going to have to come out of pocket in addition to the fact that you had a tragic loss at your home.
4) Service Line Coverage
Just for good measure, I’m going to throw a fourth coverage out there because I think it’s a pretty tremendous coverage extension to consider, service line coverage.
I’ve actually had this happen to me personally twice where the water service line from the road to our home.
This was back when we lived in the city of Albany, but it broke twice, same house, same service lines, snapped twice.
Both times we had to pay somewhere between $10,000 and $15,000 to have an entire crew repair the line.
That was a small home in Albany that didn’t have any additional residual damage.
This is a little additional coverage with minimal cost for high-value homeowner customers.
High-value homes have unique risks and exposures that most homeowners are completely unaware exist. Setting up the proper insurance program can be confusing and complex.
Rogue would love to help you solve that problem.
If your current insurance professional has never addressed programs such as these with you before, then I’d encourage you to reach out to us today.
I look forward to introducing you to a new way of viewing your personal insurance program.