High-end rentals in Hawaiʻi experience all the normal risk factors of rentals in other states, plus the weather, landscape, and tourism liabilities that are distinct to the area. Upscale vacation homes, condos, and other rental properties demand a specialized approach to insurance to make sure high-net-worth owners are financially protected.
Unfortunately, conventional homeowners and renters insurance policies often exclude important risk factors. Private client insurance steps in to provide this coverage for the property, assets, and tenants. But what is private client insurance, and how does it work for high-net-worth individuals?
This article examines the coverage options for high-end rentals in Hawaiʻi and the advantages of private client insurance to help-net-worth individuals find the right coverage for their property.
Why Standard Landlord or Homeowners Insurance May Not Be Enough
Private client insurance is specialized coverage that protects assets and collections of “significant value.” Although the definition of “significant value” may change, it is usually defined as a total asset value of between $1 million and $5 million. Many high-net-worth (HNW) individuals protect these assets with conventional homeowners insurance and additional riders, but these standard policies often leave substantial coverage gaps.
For example, standard policies often exclude or limit protection and replacement value calculations for high-value items. In high-end rentals, this can include fine art, antique furniture, rare pieces, or custom architectural features. These valuable assets may be vulnerable to damage or destruction from common risk factors like fire, flood, theft, or damage since their value is beyond the scope of the policy’s coverage.
Private client insurance policies address the nuances of owning a high-end rental property, including high-value asset protection and liability coverage for temporary or high-profile tenants. While standard policies often exclude short-term rental liability for even common platforms like Vrbo and Airbnb, private client insurance may be customized to meet these needs.
Private Client Insurance Solutions for Luxury Property Owners
Private client insurance is personalized to protect high-end rental properties and assets from specific liability exposures and streamline asset protection under one provider.
High-Value Home Insurance
High-end rental properties are often architecturally unique. They may contain premium building and finishing materials or custom designs. For conventional homeowners insurance, a broad market value assumption may be used to calculate the cost of replacing the rental property. However, this may not tell the whole story, leaving the owner to pay out-of-pocket to repair or replace high-end finishes.
Private client insurance specializes policy coverage with finely tuned appraisals of the individual property. This helps make sure that repair or replacement claims are fully covered for high-end design assets, preserving their value after reconstruction.
Personal Property and Contents Coverage
This bespoke approach to high-end rental coverage also improves property and contents coverage. The owners of high-end rentals often have individual items of high value, such as artwork, rare furnishings, or specialty appliances. The general limits in standard policies may reduce these valuable items to an inaccurate standard calculation. In contrast, private client insurance guarantees that individual items will be replaced or repaired at their full value.
Owners of high-end rentals can schedule individual items that they are particularly concerned about to make sure they are individually appraised and accurately reimbursed in case something happens.
Additional Coverages
In addition to home and property insurance, high-end rental owners should also recognize these ways that private client insurance expands standard policy coverage:
- Liability protections can extend to landlord liability coverage, accounting for property damage and injury resulting from tenant or guest activity.
- Loss of income coverage is rarely included in standard insurance but can be essential for high-end rental owners if a covered peril causes their property to be uninhabitable.
- Umbrella insurance or excess liability coverage can be bought and customized to provide higher limits than the primary policy, often to protect against potentially disastrous lawsuits related to tenant or guest liability.
While standard policies can suffice for normal wear and tear on mid-value properties, active high-end rentals have far more liabilities, and the liabilities themselves are more costly. A single lawsuit could completely exhaust the coverage of a standard property policy, meaning the owners of high-end rentals would be out of pocket for these events.
Frequently Asked Questions
Can I use homeowners insurance to cover a luxury home I’m renting out?
Not usually. Homeowners insurance is designed to protect owner-occupied residences, which means rental activity is usually not covered, especially for short-term rentals.
What if I rent my luxury home only a few weeks per year?
Seasonal or short-term rentals often expose owners to gaps in standard insurance policies. Private client insurance can be structured to cover occasional rental use.
Does private client insurance cover vacation rentals and short-term guests?
Yes. These policies provide liability and property protection for short-term occupancy and other guest-related risks.
Should I require tenants to have insurance?
Yes. Tenants should be required or advised to carry renters insurance and sign clear leasing agreements outlining responsibilities.
How do I ensure my high-value furnishings are fully protected?
High-value items should be individually scheduled on private client insurance policies to make sure they are replaced at their appraised value, not at the standard sublimits of normal policies.
Local Insurance Experts Customize Private Client Insurance for High-End Rentals in Hawaiʻi
Private client insurance provides the owners of high-end rentals with the protection they need to secure their property and assets against theft, damage, and loss. Standard insurance policies often limit or exclude high-end asset value when calculating repair and replacement costs. They often lack essential coverage for high-end rental owners, including loss of income, additional liability, and excess liability coverage.
At Atlas Insurance, our agents build on nearly a century of experience helping property owners in Hawaiʻi protect their high-end rental properties and assets from damage and loss. Contact our team today to learn how personalized private client insurance can bundle and customize the policies that you need to protect your high-end rental property in Hawaiʻi.