I wonder how many owners of homes in the near vicinity of Gleneagles are packing their bags and counting the money as they let out their properties during the Ryder Cup. Looking at the Airbnb and Owners Direct websites, homes that would likely fall under the high net worth category are being charged out at around £1000 a night – and there’s not much availability if you’re tempted!
It’s long been an established practice in the leafy suburb of Wimbledon to let out properties to players, coaches and spectators during The Championships. Now the desire amongst HNW clients to rent out their homes on a short-term basis for other major sporting events appears to be on the increase according to some of the specialist insurers we work with.
Clearly, if a client wants to rent out their home, they’re exposing themselves to all kinds of new risks – all the more so if their property contains valuable items. Some policies will specifically exclude the insured from renting out their property while others may require the client to take out additional coverage. While this not necessarily widespread issue for many intermediaries to worry about, it does highlight the fact that HNW clients are a different animal from us mere mortals.
But what is the definition of a HNW client? It does depend on the insurer and, you’ll not be surprised to learn, there are no standard definitions but in general HNW policies are suitable for clients with possessions exceeding £75,000.
With valuable homes come valuable jewellery, furniture and artwork and their owners tend to be more demanding with regards to the service they receive – yet they can be surprisingly uninformed when it comes to actually valuing their possessions. In our experience, undervaluing is as much of a problem in this sector as it is in the standard end.
Clients can be forgiven for inadvertently undervaluing jewellery for example. The value of gold and precious gems rocketed when the price fell out of the bottom of the housing market in 2007 and has pretty much stayed there. While insurers on the whole are satisfied with a five-year old valuation, it is worth encouraging HNW clients to value their valuable possessions such as jewellery or antiques or artwork more regularly to avoid the potential for a claim to go horribly wrong. While it means paying for a valuation, surely the cost is worth it if the client thinks a watch is worth say £3,000 when in fact it is valued at £10,000? If you do have a number of HNW clients, then it could be worthwhile striking up a relationship with a local jeweller or art dealer to offer revaluations at a discounted rate to your clients.
Underinsurance can also be a problem when it comes to insuring the building itself. We all know the insured value is based on reinstatement costs and not market value – but this can be harder to determine for listed buildings for example, or those in areas that are harder to access. The logistics of getting materials to or from a site can add to the overall reinstatement cost and if a property is listed, then it could involve getting specialist materials that are hard to source and thus more expensive. For really unusual HNW properties, it is worth considering a valuation survey to ensure the client has the right level of cover.
While HNW clients are still price conscious, they don’t suit the tick box mentality of the price comparison websites. They want a more personal and advice driven service when it comes to arranging their buildings and contents insurance and, if it comes to it, making a claim. At The Source, we have recently reviewed our High Value Household offering and can help you tailor each policy to your client’s specific needs and ensure they are adequately protected. Offering them a premier, personalised service could pay dividends in the long-term.
Talk to us to learn more.
Our Sales Team are here to help you; Monday - Friday, 8:30am - 6pm 02920 265 265 or Email admin@thesource.co.uk
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