The world is filled with standard homeowners’ insurance policies that do a fine job of covering all of the things you’d expect. But there also are homeowners’ insurance policies for luxury homes that protect you in the way, say, a coat built for mountaineering might.
The difference isn’t always visible to the untrained eye. But with winter finally baring its teeth recently, luxury homeowners covered by a more comprehensive policy will definitely have less to worry about.
To get technical for a moment, what we’re talking about in insurance parlance is “all-risk” coverage vs. “named peril” coverage.
A named peril policy covers only what is specifically noted in the policy. When coverage is written on a named peril basis, the burden is on the insured to prove that one of the named perils caused the loss. An all-risk or open peril policy covers everything except what is specifically excluded in the policy.
So let’s imagine the worst-case scenario for a moment. Say your home sustained some serious damage in a storm that just blew through. Here’s the sort of expenses that an all-risk policy would cover with little muss or fuss:
Additional Living Expenses: If a covered loss to your house, other permanent structure or contents makes the dwelling(s) uninhabitable, your policy would cover reasonable increases in your normal living expenses, which could include:
Temporary Precautionary Repairs: After a covered loss, your all-risk policy would cover temporary precautionary repairs to protect the home, contents, or other structures from further damage.
Debris Removal: A better policy would cover the cost to demolish damaged property and remove debris.
Forced Evacuation: If you are forced to evacuate your home or other permanent structure as a direct result of a covered loss or a reasonable threat of a loss covered under the policy, you may be covered for the reasonable increase in normal living expenses for up to 30 days.
Tree Removal: Unless covered elsewhere under the policy, the insurance company also would pay the reasonable expenses you incur to remove trees fallen due to wind, hail, sleet, or weight of ice or snow.
Food Spoilage: If you have coverage for Contents, it also may cover the cost of spoiled food and wine caused by power interruption.
What else? Well, let’s assume the next storm drops so much snow that your roof somehow caves in and that damage is extensive throughout the house. The sort of robust policies we’re talking about include what’s known as “extended replacement cost.”
That means the insurer will pay to have your home repaired or rebuilt to its original condition – even if the cost exceeds your policy limit.
With such a wide selection of carriers and policies to choose from, finding the right home policy isn’t easy. That’s especially the case when getting into specifics with premiums, coverage limits, deductibles, exclusions, endorsements, etc. What is clear, however, is that the coverage terms and limits found in a standard policy are likely to leave owners of more expensive homes out in the cold.
Mike Rosser leads the Private Client Group at CCIG. Reach him at MikeR@thinkccig.com or 720-212-2068.
CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you lower your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.
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