A homeowner’s policy designed for higher value homes (“private client”) will Guarantee Rebuilding Cost (Replacement Cost valuation) if at inception date of coverage, the house is insured to full replacement value rather than a policy designed for the mass market which usually contains an additional 25% of Coverage A. Also the additional 25% of Coverage A may only apply to the home and not to other structures at the residence. For this reason, industry services such as Marshall Swift Boeckh cost estimators are referenced to determine replacement value when obtaining quotations from insuring carriers. After coverage is written, an inspection will usually follow in order to confirm the calculated replacement cost. A policy designed for higher value homes will also provide full limits for coverages such as Backup of Sewers & Drains* and Rebuild to Code, rather than fixed monetary or percentage sub-limits. The policy may also contain a Cash Out Option**.
Primary Home: Additional differences in coverage highlighted in an actual AssetSure® Summary
|Coverage||Mass Market Policy||Private Client Policy|
|Limit Backup Sewers & Drains||5,000||Full limits|
|Rebuild to Code||10%||Full limits|
|Guaranteed Rebuild – Replacement Cost Value||No||Yes|
|Cash Out Option||N/A||Yes|
Because Private Client forms include coverages such as Rebuild to Code and anticipate experienced and qualified contractors and engineers to complete the repairs, the replacement cost that the private client insurance carrier requires on the policy will be higher on average than a mass market policy. Also anticipated is catastrophic impact to an area resulting in increased labor and material costs.
Primary Home: Differences in Replacement Costs highlighted in an actual AssetSure® Summary
|Mass Market Policy||$1,000||$884,300||$3,556|
|Private Client Policy||$5,000||$950,000||$3,031|
Primary Home Liability extended to the following locations:
1050 Beach Ave, South Beach, NC
1265 Tradewinds Road, East Branch, NC
Other additional features of Private Client forms include increased sub-limits for situations when valuable items are not scheduled or other specified classes of property, and a covered loss occurs, whereby contents limit on the policy will provide higher maximum values on certain classes of contents. Some examples include trees, jewelry, guns, business personal property, food spoilage and others.
*Backup of sewers and drains claims scenarios:
- Home sewer lines backup, and there is a reverse flow of sewage back into the home
- Loss of power, sump pump failure and water inundation
**Cash out option claims scenarios:
Loss of home due to fire and decision to not re-build. Many insurance companies offer some form of home replacement cost coverage. Those that do will generally pay replacement cost only after repairs are completed. They will not likely pay for the full value of the home if you choose not to rebuild. Most will settle claim by paying actual cash value: replacement cost minus depreciation. AIG, Chubb and Cincinnati Insurance Company provide a replacement cash out option on certain policies which offers a third alternative to available options: repair, replace with like kind and quality; build at another location up to amount it would cost to rebuild at current location; cash out – carrier will pay up to the dwelling and personal property limits shown on your policy.