Insuring homes, general contents and cars is almost second nature. But what about the less obvious possessions, gifts, inheritances, and niche collections that you acquire over the years?
From vintage motors, haute couture, designer handbags and jewellery to antiques, fine art, wine and whisky collections, musical instruments and even specialist electronics or sporting equipment, you must ensure that your insurance keeps pace with your purchases and lifestyle.
Over the years, it can be astonishing how many valuable items – sentimental and monetary that we accumulate that slip under the radar of our insurance policies.
It is estimated that 1 in 6 of the so called high-net-worth community have insurance policies based on valuations from 20 years ago or more. It is impossible to have an adequate policy in place based on such outdated figures.
Many items including diamonds, gold and rare vintage wines and spirits have considerably increased in value in the last two decades leaving owners exposed to underinsurance in the case of theft or damage.
According to the Wealth Report by Knight Frank, the luxury collectible sector saw a strong performance last year, with record-breaking sales led by fine wine and watches, both rising an impressive 16% throughout the year.
Since November 2018, the cost of an ounce of gold has increased by 60%. In the last 10 years the price of diamonds has increased by approximately 33% while rare whisky has increased in value by a staggering 586%.
If you own jewellery or watches from coveted brands such as Van Cleef & Arpels, Cartier, Patek Philippe or Rolex which appreciate, regular valuations are essential.
Plus, with soaring values in wine and whisky, you should also seek expert advice about how to store or lay down your collection to preserve its value.
The ‘single article limit’ is the most the insurer will pay per item of jewellery. If you have any items that exceed this figure, they must be specified on the policy with regular valuations.
The ‘overall limit’ is the most the insurer will pay out in any one claim and is often the most they will accept being in the house at any one time. If the total value of your jewellery and watches exceeds this figure, you must choose a specialist insurance provider that offers higher single article limits.
Ownership of many high value items will have derived from profit-motivated investments. But people who have inherited or been gifted items, will often be unaware of how much they are truly worth as the focus is on the emotional and sentimental – rather than financial value.
Owners often overlook getting regular accurate, expert, valuations and as a result, the valuations that owners provide for insurance purposes can often be underestimated.
This leaves coveted or sentimental items significantly underinsured, and facing losses of thousands, in the event of fire, flood, theft or an unexpected event such as an attack by wasps! I recall one Lycetts customer who, to escape a swarm of wasps, swung her arms about and smashed her £6,000 watch against a wall. Fortunately, she was adequately covered by her policy.
As it is becoming increasingly popular to use collectors’ items as an investment for retirement or inheritance funds, it’s essential that these items are insured properly to safeguard assets for generations to come.
The more high-value collectibles, exquisite art, specialist equipment or irreplaceable heirlooms you own, the more complex your insurance considerations become. The more luxurious, rare or cherished items a person owns, the more care they need to take in selecting an insurance broker who truly understands their needs and lifestyle, so they are never exposed to the risk of being underinsured.
Homeowners may be unwittingly risking thousands of pounds worth of losses after a decade of exponential price increases across key sectors of the art and antiques market.
Sectors such as 20th century British art, jewellery, Chinese art and classic motor cars, have seen significant appreciation in recent years iso it’s essential to keep abreast of any significant or even subtle fluctuations in valuations.
One of the main causes of underinsurance can be the omission of assets. Many high-value, high-risk items may not be covered by your insurance if they are not specifically detailed in your policy. Any omission could be financially and emotionally disastrous.
Whenever you add to your personal precious collections or investments in art or wine, you should always add them to your policy immediately – do not wait until it’s time for your annual insurance renewal or review.
Although it’s possible to find the approximate value of most assets online, bespoke or inherited pieces of jewellery, heirloom antiques or unique art collections, should always be evaluated by experts in their field.
As well as valuations, settings on valuable items of jewellery and watches should be inspected by experts on a regular basis to ensure that insurance policies remain valid.
A lack of thorough assessments, inventories and expert valuations has led to around 54% of high-net-worth individuals being concerned that they may be underinsured.
Without annual professional valuations, you run the risk of limiting your insurance pay-out or worse still, invalidating your policy if the true value of your insured possessions is incorrect.
By having regular, professional valuations of your luxury items, your insurance policies will accurately reflect their current value and can be tailored to your lifestyle and interests.
Plus, you’ll have documentation to support your valuation in the event of a claim, which will rapidly speed up the admin and pay-out process.
Year after year, there will be fluctuations in the value of many ‘less obvious’ items that you own so you should always consult experts to establish their true and present value.
My team of discreet and professional experts can offer advice on all aspects of protecting emotionally and financially valuable assets. From a treasured family heirloom to a high-profile investment piece, they will ensure that you have the cover you need, not the cover you don’t.
William Barne is Regional Director at Lycetts. William specialises in advising landowners, farmers and private clients throughout Scotland and leads our team of offices across the country.