Any home is vulnerable to fire risks, both from internal and external hazards. Still, if you live in a high-value home or one that qualifies as a luxury property, your financial challenges from any issue is likely to be significant (no matter how much money you have in the bank). You will have to make the investment in high-value homeowners insurance for this reason.
Still, even high-value homeowners insurance has its limits. As a result, you still have to ensure that your policy has the appropriate benefits attached. In the end, you want to make sure that if your home is severely damaged by a fire, that your policy will be instrumental in helping you recover.
What Does Your Luxury Home Insurance Cover?
Like all other forms of homeowners insurance, high-value policies will cover your property in the event of unexpected, unavoidable accidents. House fires almost always fall into this category, and therefore your plan will enable you to rebuild your home and replace damage possessions.
However, no homeowners insurance policy is unlimited, and policies are not likely to cover 100% of the costs of any type of damage. Why is this, you ask?
One of the primary reasons for this scenario is that, 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 it.
How to Make Sure You Can Rebuild
Even though your high-value homeowners insurance will help you recover from fires, it’s imperative to speak to your agent in the runup to enacting your policy. There are a few ideas to keep in mind:
- 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 in addition to replacement cost value homeowners insurance.
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 total financial advantage. We’ll make sure you get the benefits you deserve.
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