At a Glance: The Tougher Aspects of Quoting High Value Homes

High value homes require a special kind of coverage - one that is not always easy to come by. But thanks to solid relationships with markets like AIG and Lloyd’s of London, South Western Insurance Group Limited has the ability to provide both standard and non-standard High Value Homeowner’s Insurance. “In most cases,” says property underwriter Amie Vandevenne, “high value homes are those valued at $1.5 million or more. They usually have significantly higher content values than the average home, and contain upscale building materials that are not always easy – or cheap – to replace.” The lifestyle typically associated with these properties, Vandevenne explains, is what makes a broader scope of coverage a must. “These homes are often the ones with the marble bathrooms and the imported home furnishings. You cannot just stroll down to your local store and replace things like that.” It is the sheer size of the risk involved, in fact, that can sometimes make even a standard high value home hard to place. The tougher aspects of quoting usually revolve around:

  • capacity issues,
  • potential claims costs, or
  • moral hazards

Vandevenne elaborates: “When it comes to capacity, it can sometimes be difficult for a single market to write the really high value homes. I would say anything over $7 million, and companies will start to balk at taking on the whole risk. Sometimes the concern is claims-related. If one of these homes ends up with a claim, it is not just going to be a $50,000 water damage claim, for example. It is going to be a $350,000 water damage claim because the homes are generally larger, and the damaged materials cost more to replace.” In some cases, says Vandevenne, who the homeowner is, and what they do for a living will play a role in making coverage difficult. “The market is underwriting the client as much as they are the actual risk. So due to potential legal liabilities, they tend to shy away from high-risk or high public exposure occupations.” Challenges aside however, Vandevenne makes it clear that South Western Insurance Group Limited has the ability to handle these tougher risks in certain cases. Non-standard high value homes meanwhile, present their own set of coverage challenges. Properties in this category include:

  • unprotected risks,
  • island properties,
  • homes with values below $1.5 million,
  • properties with former claims,
  • stand-alone seasonal properties, and
  • secluded properties - especially “off the grid” homes

“We are also finding that, for estate purposes, a lot of parents’ homes are being made part of a family trust,” Vandevenne adds. “We look at those, but that type of ownership cannot always be accommodated. Sometimes a home will be put in a company’s name for tax purposes. We can usually write something like that, as long as the homeowner is not making money from it.” Vandevenne says brokers are pretty conversant with what is required for high value home coverage submissions. But she does think it is important to remind them that it can take longer to process these types of requests than it does other insurance. “As is the case for all property coverage, high value homeowner’s insurance is something we need to be pretty thorough about. We typically need at least 24 hours. Especially since providing homeowners with the best coverage necessitates not rushing the process.”