Luxury Home Insurance: Rebuilding After a Fire

A fire can be a devastating household accident no matter what the size or shape of the home you live in. However, if you live in a high-value or even a luxury home, then the loss might be compounded. The good news is that your homeowners insurance is likely to pay for the necessary repairs to enable you to move back home.

Still, even home insurance on high-value homes has its limits. Therefore, you’ll need to make sure your policy has terms and conditions properly tailored to your property value. If your home is a total loss to a fire, then the right benefits can become instrumental in helping you recover.

What Does Your Luxury Home Insurance Cover?

In all likelihood, high-value home insurance will cover fires because these are often unpreventable and unavoidable hazards that might occur on the property. However, there is no promise that it will cover 100 percent of your damage costs, even though it will likely count the total loss of the home as a covered scenario.

Why is this, you ask?

The answer: Your homeowners policy might not compensate you for the full cost needed to replace the home at today’s value. Over the years, construction and labor costs rise, especially in areas with high-value properties and competitive real estate markets. However, some home insurers write policies based on the home’s initial replacement cost value.

That means that even if your house is worth more now than it was 15 years ago, your policy might still only pay you based on the value you insured the home for when you bought your it. Therefore, it's imperative to periodically review your homeowners policy and increase your coverage limits as needed.

How to Make Sure You Can Rebuild

Because of the expenses required to rebuild and refurnish a high-value home, it’s imperative to speak to your agent about the best way to tailor your homeowners policy limits to guarantee you effective repayment for your losses. There are a couple of ways to do so:

  • Include Guaranteed Home Replacement coverage on your dwelling insurance. Under this coverage, you’ll be able to receive the full value necessary to rebuild the home. Therefore, there usually won’t be a particular dollar value that limits the maximum amount for which your policy will compensate you. You’ll have a lot more leeway to repair the home to its previous condition.
  • Additionally, make sure your policy includes contents coverage that adequately insures the value of your belongings. If you have particularly expensive possessions, like art or jewelry, then your standard contents coverage might not pay for damaged items at their full values. To get increased coverage on these items, you will likely have to buy scheduled items riders.

Your insurance agent is the place to start when insuring your high-value home. They can help you choose the policy limits and coverage that are always best for your benefit.