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Kitchens present a special case for insurers. Unlike other rooms where the furniture is not part of the replacement value of the home, the appliances in kitchens typically are. As a result, says Katherine E. Remus, an appraiser for Chubb, the "mass affluent" who have disposable income often don't think twice about installing premium brand appliances when it comes time for an upgrade.

Remus says she's used to seeing dishwashers, refrigerators and ovens from high-end manufacturers like Bosch, General Electric Co., Sub-Zero Freezer Co., Wolf Appliance Co. and Viking. These units, some of which sell for as much as $4,000 apiece, are an easy way for owners to drive up the replacement value of their homes.

The choice of cabinetry and kitchen countertops are also a giveaway, and some among the mass affluent are branching out to make their kitchens unique. "A lot of people still like the granite, but we're starting to see people do limestone, we're seeing pressed concrete for countertops, filestone and soapstone," says Remus.

In this particular home in eastern Pennsylvania, in addition to packing their kitchen renovation with top-of-the-line appliances from the Wolf Appliance Co., the owners have decided to adorn their cooking stove with a custom copper vent hood and to include vertical separation walls in the custom cabinets at floor level.

These are yet more ways in which people of means drive up the replacement cost of their homes--and raise the premiums they must pay their carriers to insure against a loss one day.

Remus says that after walking through this home, she would call the home owners and talk to them about the cost of the renovation, and whether the work was done by a contractor of their choosing, or whether the work was subcontracted out to a kitchen specialist by a prime contractor.

April 15, 2006

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