Insurers Favor High-Value Homes

From Realtor Magazine Online, Daily Real Estate News December 17, 2007

Insurers are offering owners of multi-million-dollar coastal homes insurance packages that — while costly — provide extensive coverage not usually available to owners of lesser properties.

The main reason that insurers like high-value homes is their top-quality construction, which makes them more likely to withstand hurricanes and earthquakes."

Along the coast, newer homes tend to be of higher value, but they're also better constructed," says Robert Hartwig, president of the Insurance Information Institute. "The fact of the matter is [high-value homes] are built like bunkers."

Nevertheless, this sort of insurance isn’t cheap. Chubb Group, which is one of the major writers in this space, charges about $10,000 per year for a $2 million home — with costs in vulnerable and expensive areas like Miami Beach running as much as $25,000 per year. Deductibles are 2 percent to 5 percent.

Installing such safety measures as lightning rods, surge protectors, back-up communications for alarm systems, seismic gas valve shut-offs, and low-temperature sensors in colder climates can cut costs up to 15 percent.

Source: Investor’s Business Daily, Brad Kelly (12/13/07)