Standard home insurance is meant to protect average priced homes with basic to semi-custom finishes. Custom or luxury homes have most likely outgrown a standard home insurance policy. That is where high value home insurance comes in… A high value home policy provide more coverage with unique benefits specific to luxury homes that a standard home policy is not designed to do.
Are you putting your biggest asset at risk by insuring it in the wrong caliber of insurance policy?
What are the major differences between a standard home policy and a high value home policy?
Guaranteed Replacement Cost: Guaranteed replacement cost gives you an unlimited rebuild amount in the event of a total or large loss. Example: If your home rebuild coverage lists $1.2 million on your policy documents and you have to rebuild and it ends up costing $1.8 million. The insurance company will pay the $1.8 million regardless, of the rebuild coverage listed on your policy documents. A standard market insurance policy will discontinue coverage once the policy limit is exhausted.
Cash Out Option: A high value home policy gives the insured the option to take a cash settlement instead of rebuilding their home. A standard home policy will require the home is rebuilt or damage is repaired with no cash out option.
Deductible Waiver: High value home policies tend to carry higher deductibles (Such as $10K). In the event of a large claim (typically $50K or more) the insurance company will waive the $10K deducitble on your policy. A standard home policy does not provide the option to waive your deducitble regardless of the size of the claim.
Equipment Breakdown: Luxury homes typically have luxury appliances and equipment. High value home policies come with equipment breakdown coverage to protect the breakdown or malfunction of those luxury appliances. Example: If you have a subzero commercial grade refrigerator that stops working and you need to replace it. It can cost $18K to purchase a new refrigerator and another $3K for installation. Your high value insurance policy would pay the full cost to replace that refrigerator and installation costs. Bonus*** it also only carriers a $500 deductible! A standard home insurance policy does not naturally come with this coverage. It sometimes can be added to your policy at an additional premium.
Customized Coverage Limits: A high value home policy gives you the option to customize your coverage limits to best insure your unique custom home. Have you made a large investment in your landscaping? You can increase that coverage! Most standard home insurance policies come with package limits with restrictions on what you can adjust.
Increased Special Personal Property Limits: A standard home policy typically has reduced limits for specific personal property items. A high value home policy increases these limits or reduces the limitiation all together.
Jewelry: $2,500 Standard Policy Limit vs. $25,000 High Value Limit
Firearms: $1,500 Standard Policy Limit vs. No Limit on High Value
Loss Prevention and Risk Analysis: High value home insurance companies will provide you loss prevention services such as: preventative wildfire spraying, water detection and leak protection devices, or personal property inventory resources.
These are only the major differences between a standard home policy and a high value home policy. There are several other differences and benefits not outlined.
As an agency that specializes in the High Net Worth/ Affluent insurance market we get asked everyday “What is High Net Worth Insurance?”, “How do you qualify for High Net Worth Insurance?”, and “What Makes High Net Worth Insurance Different?” In this article we will answer these commonly asked questions about high net worth insurance.
What is High Net Worth Insurance?
High Net Worth Insurance is designed for families and individuals that have more to protect in value and/or quantity. There are insurance companies that only insure in the high-end market and those insurance policies are built and designed to support high value assets and clients. Those insurance companies have the ability to insure higher value homes, larger liability umbrella limits, and unique or expansive collections (jewelry, wine, artwork, etc). The standard insurance market typically does not have the capacity, appetite, or ability to insure.
How do you qualify for High Net Worth?
If you are feeling you have outgrown your current insurance company it is probably time for you to explore switching to a high net worth insurance program. However, there are some clear indicators that are looked at for qualifying for the high net worth insurance market:
Home rebuild value above $750,000 replacement cost
High value vehicles
A large liability umbrella need (typically over $3 million)
A complex insurance portfolio with a lot of insurable assets
High value items/collections such as jewelry, fine arts, antiques, sports equipment, etc
High income earning individuals or those that may have just received a new influx of funds
*** You do not need to meet all of this criteria to qualify. These are just key indicating factors that we look at if the high net worth insurance market is a good fit for you.
What Makes High Net Worth Insurance Different?
The high net worth insurance market is different in policy contracts, capabilities, member benefits, and claim support.
Policy contracts: The insurance policy contracts are robust and often times package many of the coverage’s you need. A standard market insurance policy typically comes with ala carte style coverage’s and endorsements that we have to pick and pull to build a policy. The high net worth contract understands the unique risks of a high value policy and includes a lot of those coverage’s on your policy. Example: Guaranteed replacement cost on home policies. Meaning you have an unlimited rebuild value for our home regardless of insured amount listed.
Capabilities: Simply put, high net worth insurance companies have the ability to insure higher value assets and individuals that the standard insurance market cannot or should not.
Member Benefits: Most high net worth insurance companies offer member benefits such as travel/medical evacuation programs or collection inventory support. These member benefits come at no additional cost to you.
Claim Support: High net worth insurance companies offer white glove claim service and support. They employ adjusters that understand how to determine valuations on high end assets.
Who are those insurance companies?
Nationwide Private Client
If you think it is time for you to explore transitioning to the high net worth insurance market our team would love to take you through our risk anaysis process. During that process we help you determine which insurance company is the right fit for you and your family and if the high net worth market is a good solution for your needs.
I’m pretty confident that if you asked anyone who has ever owned a rental property you would get an overwhelming response that it’s not as lucrative or easy as they thought it would be. In fact, owning a rental property can be a major pain, and end up costing you a ton of money!
I certainly don’t mean to be a “Debbie Downer”, and I know that if it’s done right it can be lucrative, but from an insurance agent’s perspective, I don’t see a lot of people doing it right.
So you’re probably thinking, “Well Chris, you are an insurance agent. What do you know about real estate or rental properties? Why should I take advice from you?”
I’m not a real estate agent, and I don’t own a rental property. However, several of my friends/family/clients/co-workers own rentals, and because I insure a bunch of their properties, I’ve had a first hand account of the process, and I’ve learned what to do, and what not to do.
I was recently asked this question by one of our PCRG Insurance clients, and thought I would share the answer here for our readers.
There are a lot of things that go into homeowners and auto insurance rates, one of them being credit. I’ve heard a lot of complaints from people who don’t like the fact that insurance companies use credit in their underwriting.
Some people have absolutely no idea that it’s used in the rate at all.
At the end of the day, there’s not much we can do about it though. Insurance companies have been using credit in their rates for decades, and that’s not likely to change.
By the way, insurance companies don’t pull your credit like a mortgage company or credit card company does. There is no negative impact on your credit as a result of an insurance company looking at it.
When I say “pull” what I mean is that the insurance company is doing what’s called a soft inquiry, which is not the same thing as having your credit pulled (hard inquiry).
When does credit play a role in insurance rates?
It’s important to understand that insurance companies don’t continuously check or monitor your credit. Usually, they only check it when you first get a quote and/or sign up with them in the very beginning.
This means that if your credit score increases (or decreases) your insurance company does not automatically know about it.
So, to my customers question of whether or not his increased credit score will lower his rates, the answer is not automatically.
What has to be done on our side as the agent is contact the carrier the insurance and ask them to do what’s commonly referred to as a “re-score”. This is when the insurance company can re-run the person’s credit (soft inquiry) to see if there is any positive bearing on the rate.
This isn’t something that the insurance company is going to let the agency do every single year, so it’s not worth even asking unless there has been a significant change in your credit score, and only you as the customer would know if that was the case.
If you’d like to get a better handle on your credit rating, it could be helpful to setup credit monitoring. We hope this was helpful! As always, leave us comment below if you have any questions.
Why do my auto insurance rates keep going up even though my car is getting older? At PCRG Insurance, many of our clients ask this question so I would like to address it from a couple of angles.
First things first, even though it’s called car/auto insurance, it covers more than just your car. It should technically be called “auto-owners” insurance, similarly to how home insurance is actually called “home owners insurance”.
It’s important to understand that there are a lot of variables that go into insurance premiums, and with auto insurance, it’s no different.
The insurance company is much more concerned with you crashing into someone and causing them (or yourself) bodily harm, or death, than they are about your car. A car is a material possession which can be replaced.
A human life is not.
When is the last time you looked at your auto insurance policy?
If you look at it you’ll notice there are a lot of different coverages on your auto policy.
Loss of Income
Loss of use
These are all things that you are covered for on your auto policy. How many of them have to do with your car?
How many of them have a price next to them on your policy?
All of them.
Your car isn’t the only thing you’re being charged for on your policy
That’s because auto insurance covers far more important things than your car as mentioned above.
Let me re-phrase that: your car insurance rate isn’t just based on your car.
You’re not the only one…
It’s also important to understand that you are not the only person your insurance company insures. You are one fish in an ocean of other fish, sharks, and sea creatures, all who have different characteristics and risk profiles.
Insurance is all about spreading costs over a large number (risk pool) of people, which each person paying their fare share. That risk pool is constantly changing, and is impacted by a ton of different things, including the overall economic climate.
This means that you are sharing in the cost of millions of other people, many of whom may have poor loss history and/or credit.
That’s what insurance is though — sharing in the cost.
The next time your auto insurance rates go up, take a look at the big picture. Make sure you’re looking at ALL of the coverages, and corresponding rates.
Hope this helps! If you would like to know more about Car Insurance be sure to visit our page dedicated to it.