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Are Your Exotic Hardwood Floors, In-Home Spa, or Guest House Covered by the Right Insurance? How Insuring to Value Can Protect Your Unique Property

Written by Lanie Raphael on

You’ve built or renovated a custom home with high-end finishes and distinct characteristics that reflect your personal style. Or maybe you’ve purchased a historic home with features that are nearly impossible to replicate. But have you obtained the right insurance to protect your unique, high-value property?

Your home isn’t just where you live; it’s a reflection of who you are and what is important to you. In today’s inflated real estate market, your home and its contents also might represent a meaningful portion of your net worth. The more your property and belongings are worth to you—financially and personally—the more critical it is to protect them properly.

That is where the concept of “insuring to value” comes into play. Understanding what it means and why it’s important can help you better protect your valued assets.

Why Insuring to Value Matters

Insuring your home to value means you are covering it for the full, current cost to replace the entire structure by a licensed, experienced, reputable builder. While you might think it’s unlikely that you will ever need to replace the entire structure, history proves otherwise.

A home can be gutted by a fast-moving fire, leveled by a tornado, or flooded beyond use by a hurricane. In fact, when Superstorm Sandy tore up the east coast in 2012, causing $70 billion in damage, countless homeowners found their properties uninhabitable, even in areas not considered flood zones.

While the cost to replace a home or other personal property varies widely by market, the current realities of supply chain constraints, rising labor expenses, and increasing inflation make it likely your home would cost more to replace today than it did just a few years ago, or more than you have the home currently insured for. That’s especially true if:

  • Your home features high-end, custom finishes and special touches, like marble countertops, exotic hardwood floors, complex sound and entertainment systems, an indoor sauna or pool, an extensive wine cellar, or imported, hand-crafted fixtures.
  • You’ve filled your home with beloved antiques, collectible art, or custom furnishings, all of which would be difficult to replace.
  • Your property has separate outbuildings, such as a guest house, a horse barn, or a structure that houses collectible cars.

And of course, when it comes to protecting your property and your belongings, it is not just about cost. We become emotionally attached to our homes, and there is often a story behind many of the items it contains. If a natural disaster or other peril damages what you value and cherish, you want assurance that you can restore and recreate what you have lost.

Given the very real risk of having to replace the home that is special to you from top to bottom, it’s prudent to ensure you have the right coverage in place, which includes insuring your home to value.

Determining Your Unique Home’s Replacement Cost

The more custom and distinct your home, the more important it is to work with a trusted advisor who has experience working with such properties. Through a consultative dialogue, your advisor will ask questions to understand what makes your home special—both to you and from an insurance perspective.

For instance, they’ll want to know if your home is a historic property made of materials that would be difficult to replace (such as exterior stone imported from another country), if you have a custom-built barn to house collectible autos, or if your bathroom sink is a one-of-a-kind hand-painted by craftsmen in Italy. They’ll verbally walk through with you every aspect of your home and other structures on the property, asking thoughtful questions to ensure they understand its unique characteristics and features.

Experienced insurance advisors also apply their knowledge of the local market, including the average construction cost-per-square-foot in your area, which greatly impacts the value your home should be insured for. In some cases, they may find that your property’s market differs significantly from its replacement cost. For example, if you own a 50-acre horse farm in Virginia that includes a modest-sized farmhouse and only one or two small outbuildings, it’s very likely the property value will be much higher than the cost to replace the structures, given that the land itself is exceptionally valuable.

With an understanding of your property’s unique characteristics, along with the local market conditions and construction costs, your insurance advisor will gain the insights to recommend the right coverage.

Avoiding Common Pitfalls in Insuring a High-Value Home

If you own a home with distinct features or high-end finishes, or you collect fine art or rare wines, it’s essential to secure insured-to-value coverage for your property. In the process, you’ll want to avoid the most common pitfalls to insuring such homes.

Pitfall #1: Underinsuring the Property

For owners of luxury homes or other high-value properties, one of the most common mistakes is underinsuring the property. Aside from insuring the main structure for less than it would cost to replace it today, many homeowners end up with policies that limit their coverage for pools, fences, outbuildings, custom driveways, and other features that fall under the policy’s “Other Structures” category. A trusted insurance advisor will work make sure your policy provides enough coverage for every structure on the premises.

Pitfall #2: Not Covering Your Personal Belongings Adequately

It’s not just your home or other structures that you need to be concerned about. In a fire, flood, or other event, your valued belongings also might be lost or damaged. That includes items with high monetary value (like jewelry, collectible art, and fine wine) and those with sentimental value (like family heirlooms). When you insure your home to value, it’s essential to factor in the value of those belongings and specify replacement costs for each item individually.

How B. F. Saul Insurance Can Help

Only an expert that understands the nuances of unique, high-value personal properties can assure you have the right coverage, and that is where B. F. Saul Insurance can help. We’re the trusted advisors that owners of distinctive properties rely on to help protect their valued assets.

We understand that getting the right coverage to protect what you cherish is important, yet complex. B. F. Saul simplifies the process by eliminating the burden of having to research and compare coverages yourself. We dig deep to understand what makes your property unique and what is happening in your local market, then we custom-craft an insured-to-value insurance solution that gives you the peace of mind that your home and belongings are properly covered, even in a total loss.

Building a relationship with an advisor like B. F. Saul also enables you to establish an ongoing dialogue about your changing needs. As local market conditions evolve, or as you renovate or add new features to your home, we keep your coverage up to date. If you’re thinking about purchasing a property in a new market, we will advise you on the insurance implications upfront so you can go into the transaction fully informed. And if you have a claim, we will serve as your advocate to ensure the best outcome.

B. F. Saul Insurance brings the benefits of an independent advisor relationship and a proven service model that puts your interests first, helping you navigate the complexities of today’s property insurance market. Our staff has served homeowners for decades and brings a wealth of expertise and experience with unique homes that need insured-to-value coverage. They regularly tap our national network of experts for local market insights. And they work with the nation’s top carriers to negotiate the best terms, pricing, and coverage for you.

If you have a unique property, contact a B. F. Saul Insurance advisor today for a free consultation and to find out if insured-to-value coverage is right for you.

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About The Author

Lanie Raphael is a seasoned insurance professional with over 30 years of experience in the industry, with experience in both commercial and high-net-worth insurance. Throughout her career, Lanie has held executive-level roles at prominent insurance companies such as Fireman's Fund, AIG, and ACE Private Risk Service in a variety of disciplines including risk management, product development, operations, and marketing. In the past decade, she transitioned to the independent agency side, assuming leadership roles that involved direct client interaction and working closely with referral sources. As president, she is responsible for leading all aspects of financial reporting and budgeting, business development, and executive recruiting at B. F. Saul Insurance.

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