If your clients own a coastal or high-valued home, standard homeowners insurance may not provide adequate coverage if an unexpected event occurs. Standard middle-market policies leave expensive gaps in coverage for homes that hold high values, typically over $750,000, or home that are located along the coast, in areas vulnerable to disastrous weather conditions. Placing coverage with a carrier who is not specialized in higher values and/or coastal locations could leave your clients underinsured, unable to rebuild the home in the event of a loss, unable to replace damaged contents, or left with inadequate expenses to stay in another location should the dwelling become uninhabitable. Insurance carriers who specialize in high-valued and coastal placements can help protect your successful clients and their assets.
The limitations of standard homeowners insurance
A standard homeowners insurance policy provides coverage for the client’s home, other structures, personal belongings, and liabilities related to injuries and damages to someone else’s property. This includes:
- Damages caused by fire, smoke, vandalism, theft, or weather damages
- Some recreational equipment, including swimming pools
- HVAC systems, appliances, and more
This coverage may be enough to cover losses for homes with lower values or properties that aren’t in areas more susceptible to catastrophe. However, because standard coverage is subject to a limit, or the maximum amount the policy will pay out toward a covered loss, middle market homeowner carriers may come up short after a claim. Additionally, these policies may exclude environmental and weather-related damages and losses, like floods, hurricanes, or tropical storms.
Current trends impacting high-value homeowners insurance needs
In the age of COVID-19, many employees have shifted to remote or hybrid working. This allows them the freedom to work from anywhere and has even introduced work vacations or “workations,” which enable them to work from vacation destinations are their leisure. Over the past two years, remote workers have flocked to fun and relaxing locations for just a few days or even long-term trips for a change of scenery. For example, last year, West Palm Beach, Florida, saw a boost in its economy as remote workers opted to travel there for their workations because of the location and relaxed COVID precautions.
With their newfound freedom, these digital nomads want a better work-life balance, prompting them to relocate permanently to more desirable locations with fewer COVID infections. For example, since January 2021, newcomers in Hawaii have influenced an influx in the purchase of expensive homes that would typically be used as vacation properties. As a result, they’ve contributed to the rise of the average home value to nearly $900,000. Indonesia is even enticing remote workers to travel to the island of Bali by creating a five-year visa that allows foreigners to work and live there tax-free.
Current trends have impacted what homeowners should consider as they explore their insurance coverage options. As of now, there’s no end in sight to the uptick in workations, changing climate conditions, rising home prices, and more, meaning standard homeowners insurance may fall short for homeowners.
Coastal and high-valued homeowner insurance coverage explained
At its core, a policy covering a coastal home should have all of the standard coverages that a middle market might provide; but these homeowner forms should also add a few extra bells & whistles to meet the client’s’ specific needs. Homeowner policies with higher values and/or along the beach might include additional extensions of Dwelling limits, extra sub-limits for Water Back-up, Mold, Identity Fraud, Cyber, Equipment Breakdown, Service Line coverage, Ordinance & Law coverage, Escaped Fuel, Scheduled Jewelry, Fine Arts, etc..
If your clients have home with Replacement Cost Value above $750,000, then a high-valued homeowner carrier will ensure that the policy limits are high enough, and the owner won’t have to pay a significant amount of money out of pocket if they file a claim. In addition, high-end policies have enhanced coverages for structural repairs and replacements, possessions, liabilities, and additional living expenses related to costs incurred while restoring or rebuilding the home. These policies might also include waivers of deductibles if the loss is large enough.
As the occurrence of named storms increases annually and more people choose to rent high-value vacation properties for more extended periods, your clients need sufficient coverage to protect their assets. Our top-notch Quaker team is ready to find the best coverage options for your clients. Contact us today to get them the protection they need to bring them peace of mind.