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  • A guide to avoiding under-insurance of a High Net Worth Property

    High net worth property insurance

    High Net Worth properties tend to be at much higher risk of under-insurance than standard homes. In fact it has been estimated that 70-80% of HNW properties are under-insured in the UK. Rapidly-moving markets result in ever-changing values of your assets, and so regular evaluations of both property and contents are essential.

    Another challenge for insurance brokers is that many HNW clients also tend to lead international lifestyles where homes can be left unoccupied for lengthy periods, leaving them more open to the risk of loss or damage. So with increased risk and the likelihood of numerous valuable assets and perhaps more than one property to consider, how can you seek to avoid underinsurance for High Net Worth clients?

    Seek an experienced High Net Worth insurance broker

    Firstly it is important to find a non-standard home insurance broker with specialist knowledge and experience dealing with high net worth insurance. It is important to allow time to speak with your prior to renewals and discuss and changes, large purchases or disposals along the way. You need to agree an appropriate schedule for regular valuations of property and contents, which may be once a year or every 2-3 years, or in some cases more often.

    Adding a room, expanding the kitchen or any other major remodelling will affect the cost of rebuilding your home so your broker will need to know about any upgrades or expansions to ensure the limits are raised appropriately.

    Ensure your property is valued correctly

    Firstly with high value properties there can be the possibility of the building being listed so it is important to identify a listed status which can impact heavily of the re-build value due to sourcing of original materials unique to the heritage of the building area. It has been known that some quarries have needed to re-open in such cases in order to source the correct material and often there can be problems transporting materials down difficult rural roads, so expenses can easily rise.

    All of this needs to be taken into consideration when calculating the reinstatement cost. A visit from an expert to inspect and value your home is essential in doing this and also provides the opportunity for suggestions to be made to better protect the family and home. Safety and loss prevention devices can often be overlooked and it is important to gain credit for such features as burglar alarms, fire alarms, sprinkler systems, electrical back-up and lightening protection systems, water or gas leak detectors.

    It is equally as important to include everything in the valuation. So there may be specific internal features, outbuildings, or external boundary walls that need to be included to reinstate a property to its original state. Don’t forget the costs of debris removal, demolition and professional fees that will need to be calculated within the cost of reinstatement. There may also be new building regulations that have to be adhered to since the building was first erected, such as the need to add features like lifts to a building that previously didn’t have them prior to the loss.

    Have you included a valuables policy to insure jewellery, artwork, and fine wine?

    Often families with substantial assets hold a significant portion of their wealth in jewellery, art or other valuable collections. Even with a High Net Worth policy there are limitations on the value of such items so it is important to individually add them to the policy. It is always recommended to take photos of any jewellery, fine art, or antiques to support any valuations and avoid any difficulties in the event of a claim. In some cases a buffer may be applied to your insurance policy allowing a certain percentage above the limited amount on the policy for such items so it is worth checking this also. Make sure that you update your broker immediately after purchasing valuable items, or ideally even consult with them prior to the purchase to ensure you aren’t walking around under-insured. Once again regular valuations are essential as the cost of gold, for example, can double within just a few years.

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