Luxury is something that is an indulgence rather than a necessity. Most insurance companies set a limit to the value of a home they will insure. Once you reach a certain high limit then you need to seek special markets that cater to luxury homes.

If you invoke the additional living expense benefit as a result of a home insurance claim then it is for similar accommodation. If you live in a luxury home then you could be seeking a similar dwelling to reside in until your home is ready to re-occupy. If not then you would be seeking a more standard dwelling.

A luxury item could be a diamond necklace. It should be appraised for value and replacement information. You choose if you add it to your policy as a floater to reduce deductible and widen coverage or you can keep it in a safe deposit box or a safe in your home.

There is specialty insurance for luxury homes which widens coverage with an expectation that a frivolous claim is less likely to occur. These policies do not have limitations such as pair and set that you will find on usual homeowner claims.