Protecting your passion: insurance for luxury assets

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A recent survey from one of the world’s largest insurance companies, Chubb, revealed some interesting statistics about the ‘passion collections’ of high net worth individuals. The results provide a fascinating insight into how HNWIs spend their money outside of real estate investment.

An impressive 77% of HNWIs like to invest in art, whilst over half have a penchant for classic cars and high value supercars. However, Chubb’s survey also revealed that 54% of HNWIs feel they are underinsured—a concerning figure, given the high-value nature of many of these assets. We sat down with some of Chubb’s expert high net worth insurance team to discuss how clients can ensure their passion collections are properly insured.

What can HNW do to protect their high-value assets in the home?

HNWIs should take extra care when it comes to their insurance. Because their items and homes are worth so much more, the exposure can be very significant. In terms of practical safety, all of the obvious things apply, from installing a specialist security system to checking all of your locks meet gold standards, especially if you live in an older, historic property.

In terms of your items in the home, a safe that has been professionally installed i.e: bolted down, is an excellent option for HNWIs with high-value items. If a client has over £100,000 of jewellery, we typically like them to have such a safe. Of course, if it’s mostly worn daily, this won’t help. But otherwise, these items should certainly be locked away.

Safes should be bolted down; we’ve had claims where the safe itself has been stolen. In addition to losing the items, this also caused considerable damage to the property when the safe was thrown down the stairs. If you do have a safe, make sure it’s installed professionally.

Unfortunately, there are no preventative measures in the world which can absolutely stop anything bad from happening. To account for this, HNWIs should make sure they have specialist insurance and most importantly the right level of cover.  We offer our clients an appraisal service, in which we visit the house, spend time with the client, and then walk around the property. An appraisal helps the client to put a correct figure on the house and everything in it, therefore preventing the underinsurance which is so common amongst HNWIs.  An appraisal also helps the client review security and fire risks at the property and discuss any improvements for better protection.

HNWIs often have unusual or high-value collections of items, such as art. How can they make sure these are properly insured?

Searching for a quote online probably won’t provide the level of cover needed for high-value collections; a specialist insurance broker or provider will be needed because they are used to assessing the value of these items, and also considering the unusual implications. For example, if you have five global properties, you may need a policy that covers artwork no matter where it is in the world. We typically provide worldwide cover for our clients, so if a piece of artwork is covered in one location, it’s covered in all, depending on local country laws or regulations.

Insurance concerns can be location based, too. In London, clients typically have monitored fire alarms. But France simply doesn’t have the same culture. It’s only recently that building regulations stipulated that you have to have a battery-operated smoke detector. A battery operated smoke detector will not protect a €20million art collection and therefore it is essential to have the right fire detection system in place which is tailored to your needs. .

And of course, many HNWIs regularly add to their collections at short notice; if you attend an auction and pick up some pieces unexpectedly, this can very quickly change the value of your collection! We compensate for this by offering clients the freedom to acquire up to 25% on the policy on fine art for up to two months, before we need to be advised of the new acquisitions. For example, if a client has a £5million policy, they can buy up to 25% of that figure and still be covered straightaway.

Has the appraisal process ever thrown up anything unusual? Is there any asset too unusual to cover?

We’ve certainly seen some surprising collections over the years, many of which are outside what you’d expect. It’s not just jewellery and artwork. We once saw a HNW client with an extensive and very valuable collection of antique wooden puzzles, which were of course extremely flammable.

Many HNWI individuals have very unusual collections of items, from historic antiques to very niche passion collections. We once went to a client’s house to discuss buildings and contents insurance, only to discover this client had a collection of rare teddy bears worth half a million pounds, which she took to teddy bear competitions. She had no cover for this, despite the huge risk involved—we listed this under her policy to provide the cover she needed.

And, although not necessarily unusual, again we have seen some truly fantastic collections of designer clothes and handbags. We’ve seen wardrobes organized according to seasonal patterns and designers, which need to be worked through by hand with an individual price on each item, to gain a sense of the collective value.

Ultimately, virtually nothing is too unusual. Just because it can’t be handled easily by a mainstream broker, that isn’t to say it can’t be covered by an insurer with the right experience in HNW policies.