High-Value Home Insurance/Home Insurers
So, what is high-value home insurance or home insurers? “It only takes a spark to get a fire going. And, soon, all those around can warm up in its glowing. That’s how it is with God’s love once you’ve experienced it. You want to sing, it’s fresh like spring, you want to carry on…” the Christian song goes.
No one can say for sure how it all started. Some say it came from an unattended campfire. It may be from a discarded cigarette butt. It could have been a downed power. Also, it might have been something seemingly harmless, such as a car that ran a flat tire. And the metal rims caused a spark. Early humankind history has always known lightning to be the usual cause of wildfire eruptions. Recent studies, however, attribute 84 percent of these instances to human actions or, in certain cases, inaction.
What is known as a fact about the 2018 California wildfires is that they occurred in the northern portion of the state sometime in mid-July. It was a bone-dry summer then. Two months leading to the catastrophe, the area received less than normal precipitation. It was one of the warmest Summers on record. Thus, the above-average temperatures made for a tinder-dry forest with abundant dried-up grass and brush. And worst, dead tree fuel – loads of it. Or, to be precise, some 129 million dead trees as of December 2017.
Responding firemen also noted 35 miles per hour winds that fanned the flames towards the small towns. The days saw the gusts peaking at 60 to 70 mph. Geographer Jacob Bendix of Syracuse University described it as “conditions primed for fire.” Meteorologist Craig Shoemaker, on the other hand, was quoted as saying that in the past, Autumn rains would have normally ended the fire season at least a month earlier. Further describing the condition brought about by the series of unfortunate events as akin to a “matchbox” and “unprecedented.”
The Mayor’s “Last Stand” in High-Value Home Insurers
The 2018 California blaze was the state’s deadliest and most destructive wildfire. At its worse, the size of sixty football fields was going up in flames every single minute. No one was spared. Even the rich and famous were victims, as well. Hollywood superstars Gerard Butler, Orlando Bloom, Alyssa Milano, Pop icons Lady Gaga and Miley Cyrus, and R&B singer Robin Thicke were all affected. Together with hundreds of families, they had to leave their homes and escape the oncoming inferno.
Even the Mayor of Malibu at that time, Jefferson “Zuma Jay” Wagner, had to put up a stand himself. Before being elected mayor, he ran a surf shop in the 1970s. His house sits on a rural canyon a few miles off the coast from Surfrider Beach. He was as true blue as any Malibu resident could get when he saw the blaze crawling toward his home of 44 years. Mayor or not, he decided to put up a fight. Armed with a garden hose, he sprayed areas around his property to prevent the advancing fire. When at last he thought his place was saved, he would notice that a section of his roof had already caught fire.
As he attempted to shoot water up to his ceiling, a section of the structure knocked him down. He barely made it out alive. Thankfully, he could follow the hose out of the house. Mayor Wagner had to spend three days at the hospital for Carbon Monoxide poisoning and some kidney damage. What would hurt him more than the injuries and burns was that the insurance company refused to pay for reconstruction. He is not alone, as their insurers rejected some 700 families with similar claims.
Many, like Mayor Jefferson Wagner, have begun reconstruction while the legal suits are ongoing. They are hoping that their appeal to the insurers will be reconsidered. And they may claim the reconstruction costs and legal fees they incurred.
Insurance as a Back-up Plan in High-Value Home Insurers
Wikipedia defines Insurance as “a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss”. It is an agreement between an insurer and an insured. Through a policy contract, the latter gets financial protection through a reimbursement guarantee or remuneration from the former, such as loss, damage, sickness, death, etcetera. Insurance acts as a backup plan should things go south, such as in the case of the victims of the 2018 California wildfires.
Mayor Wagner admits that he never saved up for his retirement years. At 66, his retirement would be in his upscale Malibu home. Besides that, he invested in one other piece of property, a condominium unit in the city. For many, having a home in Malibu, California, means a chance to rub elbows with the rich and famous. Hollywood actors, actresses, entertainment industry moguls, and sports stars could be your next-door neighbor. If that doesn’t appeal, maybe 21 miles of coastline, or what the city terms “21 miles of scenic beauty” coupled with Mediterranean climate, might tickle your fancy.
There is a saying that goes, “The bigger they are, the harder they fall.” For upscale homeowners, the bigger the house and the fancier the interior, the risk of suffering financial loss may be gargantuan. However, for insurance “non-believers,” paying for something intangible may be a bitter pill to swallow as insurance premiums for Malibu homes versus that of a typical US home in another state may cost the insurer twice as much. So the question is, why bother with home insurance?
Home insurance, quite simply, is insurance for the property. It covers loss or damage to a home and all items that may be found inside. The policy has typically a liability limit that determines the amount of insurance coverage. There are also “deductible” or out-of-pocket expenses from the insured. It is not to be mistaken for a home warranty or mortgage insurance.
High-Value Home Insurance for Home Insurers
Home Insurance is the basic protection for securing one’s home against perils, be it for damage or loss of the actual home and its contents, including personal liability for harm to persons. This means the home is insured to the extent of the selling price. Or just enough to cover the mortgage in the event of damage and/or theft. What isn’t covered are those resulting from natural disasters, like “Acts of God” and “Acts of War.” Riders or extra policies may be purchased for these, though. Some have the wrong notion that securing home insurance is a luxury when in truth and fact, it is a necessity. Most lenders would require this from home loan borrowers to protect their investments. This also goes for landlords who ask for renter’s insurance, another form of home insurance.
On the other hand, High-Value Home Insurance is insurance coverage for homes with higher-than-normal values. It is comprehensive coverage for expensive homes. This is typically for heritage houses or those with particular design elements and unique features. Actually, this form of insurance is not just a single product. But an assortment of personalized services. Offerings to meet the protection demands of these specialized homes, or in industry jargon, “expanded coverage limits.” High-Valued insurance protection may also be applied to condominiums and rental homes. Sadly, it is estimated that 40% of high-value homes are underinsured or only have basic home insurance coverage. This means that apart from the actual structure of the house, customized work/renovation and specialty construction are not covered.
High-Value Home Insurance
The three basic levels of coverage, whether high valued or otherwise, include the following: First is Actual Cash Value, representing the total cost of the house and contents, less accumulated depreciation. Second, Replacement Cost, which is the same as actual cash value without deducting depreciation expense. This means that the rebuilding funds will at least equal the original cash outlays of the owner-insured. Lastly, is Guaranteed or Extended Replacement Value. This is where claims may go higher than the home’s original cost to an extent not exceeding 20 to 25% higher. In this case, the claimant may be able to reconstruct with better or improved specifications.
For the guaranteed replacement value or what others term as expanded coverage limits, there are added value services and benefits an owner-insured may not expect. For example, in partial loss scenarios, a standard coverage would only pay for repairing the damaged portion of a kitchen damaged by fire. With expanded coverage, the insurance pays for the renovation of the entire kitchen. The same goes for valuable items that come in sets or pairs. The coverage provides for the replacement of everything and not just the damaged ones.
The “Living expense” benefit is another extra feature. This is where the temporary living arrangements of the owner-insured, while renovation or rebuilding is ongoing, are paid for. There are also instances of cyber theft. Or stealing of digital property, the coverage also offers a level of protection against this. There is also “Cash Settlement.” This provides cold cash remuneration that gives the insured the flexibility to use the proceeds for any other purpose, not just rebuilding.
Additional coverages (high-value insurance) may also include the following for home insurers:
- Sewer Backup for flood drains and sewerage systems that could be damaged during floods
- Flood Coverage which is the more comprehensive version of the above and will cover all items that could be lost, destroyed, or damaged by flooding
- Vacation Home Coverage would also protect a second home that is still part of the original policy.
- Kidnap and Ransom’s coverage covers ransom for members of the family that might fall victim to kidnapping.
- Rebuilding to Code for rebuilding if in case a home needs to be reconfigured to conform to building and safety codes
- Medical Coverage for pets is for animal lovers who will pay for veterinary bills and even temporary lodging.
- Household Help Coverage for nannies and maids that could suffer injuries while on the job includes medical expenses and even lost income
- Excess and Umbrella Liability Coverage if the homeowner is sued, and lawyers’ fees, fines, and restitution must be reimbursed.
How does a home qualify for high-value insurance from home insurers?
The basic qualification for High-Valued Home Insurance is, of course, the value of one’s home. It should be in the avenue not lesser than $750,000.00. However, some companies may consider a 300,000 home value as such. It should also carry a distinct characteristic making it stand out over typical homes, such as in the case of Heritage Houses. The designs and the original materials used in these structures cannot be reproduced or bought at hardware stores. Another condition would be that the design elements are specially designed by an architect or interior designer specific to the home. Say, for example, a “green” home with environment-friendly materials and features such as solar-panel roofing linked to the centralized heating system.
Apart from the main house, structures will also be accounted for and included in the coverage. These include swimming pools, landscapes, gazebos, outdoor living areas like a guest room, greenhouse, detached garages, etc. Of course, high-value homes do not come empty. They would usually come with expensive or unique contents, such as but not limited to expensive or antique furniture, appliances, fixtures, paintings, rugs, jewelry, and even a vintage wine collection.
But safe to say the most sure-fire way to determine whether or not one’s home qualifies is, of course, to talk with High-Valued Home insurers. They will be more than glad to send highly qualified personnel that will provide on-the-spot evaluation, assessment, and value estimation of the home, including the items found inside. This free service is called “Risk consulting/home inspection.” It covers onsite inspection while discussing with potential clients the appropriate level of coverage and the various ways to mitigate risks.
Lessons from the California WIldfires
The 2018 Woolsey Fire in the vicinity of Los Angeles and the Camp Fire In Butte County resulted in the demise of some 90 people, while around 20,000 structures spread across 250,000 acres were reduced to ash and soot. In monetary value, Cal Fire reports fire suppression costs of $432 million. Insurance claims have topped $12 billion from some 40,000 claims. More than a fourth were residential, and most were a total loss. Pacific Gas and Electric Company PG&E settled with wildfire victims for $13.5 billion.
To date, millions of American families opt to live in the wildland-urban interface where the urbanscape meets forests and grasslands. It is estimated that a third of US homes are in these scenic zones and make up an ideal home not too far from the comforts of the city but offers a calm, quiet surrounding free from all the noise. In California alone, 1.7 million houses out of the 3 million built in these areas have been declared highly prone to wildfires. The tendency is for home insurers to increase premiums attributed to a higher level of risk. Instead of securing the right amount of insurance coverage, homeowners tend to cut back, leaving their homes underinsured and, worst, skipping out on securing protection altogether.
Many disasters, not just wildfires, can be attributed to global warming and changing environmental conditions brought about by widespread urbanization and irresponsible citizenship. In short, calamities are inevitable and will be a question of when and how severe. One’s home is, more often than not, one’s greatest and most precious asset. It may not necessarily be monetary value but one where memories are made and kept. It’s where family and friends converge, and one can seek refuge and solace in everyday stress and challenges. You owe it to your family and yourself to secure an asset that is the fruit of hard work and perseverance.
So does your home (home insurers) qualify for high-value insurance? Contact us here at Team AIS in Denver, CO!