High-Value Home Insurance

Why a high-value home is insured differently

A standard home policy is written for a standard home. Once a house is larger, custom built, older with quality materials, or full of things worth more than the policy’s built-in limits, the standard wording starts to leave gaps. Insurers know this, so they underwrite higher-value homes more the way they look at a commercial building: construction, rebuild cost, protection, how it’s used and who lives there.

That means the application matters more, and so does reading the policy you get back.

Replacement cost is not market value

The number that matters is what it would cost to rebuild your home after a total loss, using similar materials and quality. That’s different from what the house would sell for. On a custom home in Oakville or Burlington, the rebuild cost can be well above or well below the market value, depending on the lot and the build.

For larger or unusual homes, insurers may ask for a professional appraisal or send someone to inspect. It’s worth doing: an underinsured home is the problem nobody notices until a fire.

Guaranteed replacement cost is policy wording where the insurer agrees to pay the full cost to rebuild after a covered loss, even if that’s more than your dwelling limit. It isn’t a blank cheque. It usually depends on insuring to the value the insurer sets and reporting renovations, and some insurers offer a capped version instead (for example, a percentage above your limit). Also ask how the policy handles bylaw and building code upgrades, which can add real cost to a rebuild.

Valuables: jewellery, art, wine and collections

Most home policies have special limits for theft of jewellery, watches, furs, silverware, coins, stamps and collections. Those limits are often far below what people actually own. Items worth more should be scheduled (listed individually), usually with an appraisal or receipt, and the appraisals should be updated every few years.

Art and wine raise their own questions. Is the collection valued at what you paid or what it’s worth now? Is a climate-controlled wine cellar covered if the power goes out? Is breakage covered? These answers vary by insurer, so they’re worth asking before you need them.

Water damage and sewer backup

Water is one of the most common reasons for home claims, and in a large home with finished basements and high-end finishes, one leak can be expensive. Check three things:

• Sewer backup: usually an add-on, with its own limit.
• Overland water: surface flooding, usually a separate add-on.
• Conditions: some insurers ask about backwater valves, sump pumps, or automatic water shut-off devices on larger homes.

Alarms, renovations and vacancy

Monitored alarms (burglary, fire, low temperature, water) matter to insurers on high-value homes, and some may ask for them. Tell your insurer before a major renovation. Open walls, contractors and a house that isn’t lived in all change the risk. Most home policies also limit coverage if the home is vacant or unoccupied for an extended stretch, so a long winter away or a gap between moving out and moving in needs a call first.

Where your home and business policies overlap

This is where things most often go wrong for business owners:

• Home office and equipment. A home policy covers business property only to a small limit, and business inventory often not at all.
• Clients or staff at the house. A client who slips on your front steps during a meeting may not be covered under your personal liability if the home policy doesn’t know about the business.
• People working on site. Housekeepers, nannies, landscapers and contractors raise liability questions that should be talked through.
• Home owned through a holding company or trust. The owner on title must match the named insured on the policy, and some home policies aren’t designed for a corporate owner at all.

Steve checks who is on title against who is on the policy, what business property is at the home, whether your business liability policy extends to work done there, and whether your umbrella sits over both.

How Steve works on this

Steve walks you through your home policy page by page, including what it doesn’t cover. He explains the shortcomings, lays out your options, and tells you what he’d do in your position. He places business with more than 20 insurers, so he can look at different wordings for an unusual home. And he calls before renewal to ask what has changed: renovations, new valuables, a new business, a family member moving home.

If your home has changed since the policy was written, a review is a good place to start.