You have seen the catchy commercials. You may have even caught yourself humming their catchy commercialized jingles. However, do you really know the price that you are paying to insure your million dollar home with a mainstream insurer?
First, let’s talk about premier insurers versus mainstream insurance carriers. Premier insurers like Chubb, Pure, Cincinnati Capstone, and AIG are carriers whose insurance products are specially designed for clients with a significant number of assets, clients with a higher than average net worth, and clients with unique risk challenges and more complex risk management needs.
At first glance, the policy contract seems similar. After all, many provide coverage for most of the same perils, or causes of loss. However, what you might not realize is that you may be overpaying to be underinsured. Premier carriers offer many additional benefits, services, and features specifically tailored to meet the needs of a select group of clients that mainstream carriers do not.
1) Paying the Price
Don’t retain more than you can afford to lose. Clients with a significant number of assets may think that they don’t need to purchase flood coverage because they could easily replace their home monetarily if it was destroyed. However, insurance carriers will help coordinate the removal of damaged property and also help coordinate with vetted contractors after a loss. This is especially important in coastal or high-risk areas, where widespread losses can cause a lack of available contractors to work with precisely when you need them.
On the other hand, don’t risk a lot for a little. An umbrella policy with $5M limits can cost about $1,500 annually. Spending that $1,500 now may help you avoid a large uninsured liability loss in the future. What you may also not realize is that premier insurers provide higher deductible options than most mainstream carriers. Carrying a $1000 deductible on a home with a reconstruction value of $200,000 makes sense. Carrying that same deductible on a $2,000,000 home may not be cost-effective. Yet, many mainstream carriers treat both of these homes the exact same.
2) Guaranteed Replacement Cost Coverage
Premier insurers perform property valuations on homes that exceed $1M or $2M rebuild cost to ensure that your home is properly insured to value. This will provide you with the best loss settlement and ensure that you receive the best coverage and benefits that apply. (Find more about market value vs. replacement cost here.) Most premier carriers also do not cap the replacement cost on your home, while mainstream carriers do.
3) Loss of Use
When your home is being repaired after a loss, the coverage for temporary housing, and any additional living expenses are provided by Loss of Use coverage. Premier carriers generally have broader coverage limits and extensive time periods that they will pay for this coverage.
Larger homes with more ornate features generally require a lengthier rebuilding period, especially after a catastrophic loss. This can lengthen the time that you and your family must be housed elsewhere. Mainstream carriers generally limit the time that the coverage can be paid out or the amount of coverage (or both). Premier carriers generally do not have a limit in the coverage they provide. Mainstream carriers typically will only pay 20-30% of your dwelling amount.
This means that, most of the time, premier carriers make it much easier for you to maintain your same standard of living in the same area that your kids attend school. They may also provide coverage for extra expenses like boarding your pets.
4) Cyber Crime and Identity Theft
Clients with a larger amount of assets have significantly more to lose. With cyber crime and identity theft as one of the fastest growing crimes in the country, their lifestyle is much more vulnerable to these crimes. Mainstream carriers limit Identity Theft coverage to $25,000.
Many premier carriers offer upwards of $250,000 for cyber crime and identity theft coverage. Many also partner with trusted vendors to provide monitoring services up to $1M in coverage to protect your personal information and prevent the crime from happening to begin with, not after your funds or personal information have already been stolen.
5) Higher and Broader Liability Limits
It’s no secret that liability coverage is one of the least expensive coverage options that you can purchase. Mainstream carriers typically do not provide access to liability limits beyond $1 – $5M in coverage. Premier carriers, however, will offer limits up to $25M or $50M. They are also more flexible on your legal options at the time of a liability claim. This will allow you to be more selective with your defense counsel, and not rely solely on the insurance company to choose one for you.
Additionally, if you have domestic employees or staff, premier carriers will offer Employment Practices Liability Insurance while mainstream carriers may limit the coverage or not offer it at all.
Many mainstream carriers treat homes valued at $200,000 and $2,000,000 the same, and they are incredibly different. Don’t fall into the belief that all insurance is the same either. If you’re interested to see what benefits or features are available to you, request a complimentary insurance review and a Sterling advisor will contact you.