Underinsurance for high net worth individuals; are you covered?

You wouldn’t drive a prestige car without insurance, so why are so many high net worth individuals underinsured when it comes to their homes, fine art, jewellery, and even their own income? The answer is usually a mix of optimism, oversight, and sheer disbelief that disaster could strike. But it can, and it does.

So, let’s talk about underinsurance. Because when it comes to protecting your wealth, ignorance is most definitely not bliss.

What Is Underinsurance and Why Should I Care?

Underinsurance is exactly what it sounds like: not having enough insurance. It means even if you have an insurance policy, it won’t fully cover the cost of replacing or repairing your assets if something goes wrong. And for high net worth individuals, it’s a silent (and expensive) menace.

Here’s how it happens. First, You get a policy that gives you cover for everything you own at the time for the market value. Then years pass, values appreciate, and suddenly that artwork is worth more than your car. But your insurance? It’s still covering it for what you paid 15 years ago. Cue financial heartbreak if it gets damaged or destroyed.

High-Value Home and Contents: More Than Just Bricks and Mortar

When it comes to underinsurance, the value of your home is the first thing you should look at, especially when you consider the rate that house prices continue to rise. Very quickly, you can find yourself underinsured for tens of thousands of pounds.

And for a high value home – typically one over £750,000 in value – a standard home policy won’t cut it. The repair costs alone could be eye-watering, especially if you have listed status, specialist materials, or unique decorative features that cost more than the average UK salary. Regular valuations and specialist high value home and contents insurance are essential to avoid coming up short.

Art & Antiques: Protecting Your Fine Collection

Your art collection isn’t just a passion project, it’s an investment. And the value of artwork and antiques can skyrocket. If you haven’t had yours professionally appraised and valued in a while, your insurance coverage might be lagging way behind.

The price of valuable art and antiques can fluctuate as time passes and as tastes change, so easily an antique can gradually increase in value without you even noticing. The same with fine art, and if we’re talking about originals that can fetch five, six or even seven figures; underinsurance isn’t something you want to discover after you need to make a claim.

Jewellery & Watches: Tiny Items, High Values

If your watch collection rivals that of a horologist, or your jewellery box holds heirlooms that would make a minor royal jealous, you need cover at the proper levels. Standard home insurance often has strict limits on valuables, and many policies won’t cover accidental loss or worldwide travel.

The good news? Specialist high-value jewellery and watch insurance, and even sufficient cover in a high value home and contents policy, offers cover for things like loss, theft, damage and the cost of repairs.

Life Insurance, Critical Illness and Income Protection: Ensure Your Legacy Is Valued

The level of your life insurance policy and critical illness cover is inherently linked to your value in terms of earnings, mortgage debt and estate values, but is also related to your general health and smoking history. If your circumstances have changed and you’ve become more valuable or you’ve become healthier (such as quitting smoking or reversing type 2 diabetes), then you should have your policy looked at to ensure you have the right levels of cover.

Additionally, Think of your income protection like a parachute – if your ability to work suddenly plummets, you really want it to be there. If you haven’t had your policy updated in the past few years it’s likely that you’ll be underinsured in relation to your earnings, as any payout levels would be linked to your earnings, which have likely risen since you last had your policy renewed. And not to give you another thing to think about but with Inheritance Tax rules, from a pensions point of view, changing in April 2027, it’s definitely worth getting some advice on a Whole of Life policy.

How to Fix Underinsurance (Before It’s Too Late)

There are a number of steps you can follow to ensure you’re not underinsured in any area as a high net worth individual.

1. Get Regular Valuations: The market changes. Your insurance should too. Regular professional valuations ensure your assets are correctly covered.     
2. Review Your Policies: Don’t assume your current insurance is sufficient. Check those coverage limits before you need to claim.     
3. Work with Specialists: High Net Worth Insurance isn’t off-the-shelf. A specialist insurance broker (hello, Macbeth!) can tailor coverage to fit your lifestyle.

Underinsurance is a problem you don’t want to discover the hard way. Our team at Macbeth Insurance Brokers specialises in high net worth insurance, ensuring your assets – and your lifestyle – are properly protected.