Under insurance in High net worth and Ultra net worth home insurance

Many policyholders are under valuing their property and contents leading to reduced insurance claim payments.

Insurance policies for High net worth and Ultra net worth policies differ from a ‘standard’ home policy as the policyholder needs to set the sums insured required for their own policy.

A High net worth home insurance and Ultra net worth home insurance requires a thought process to ensure that adequate cover is purchased for buildings and contents. For many however, not enough thought is given to this important process and under insurance results.

If there is a situation where a claim needs to be made and it is found to be under insured, the insurer will apply the condition of average to reduce the claim amount payable to by them. For small claims this would not cause too much inconvenience but if the property is destroyed by fire then an entirely different set of financial implications arise. If this is the main home of the policyholder then alternative accommodation needs to be paid for, the (fire damaged) property needs to be rebuilt and the contents replaced. If there is under insurance affecting the claim payment then, depending on the size of the loss and the sums insured, the shortfall could amount to tens of thousands, hundreds of thousands, or even more.

It is essential that owners of property who are suited to a High net worth home insurance or Ultra net worth home insurance policy carefully calculate what cover they need. A chartered surveyor will be able to calculate the building sum insured required. This needs to include not only the main dwelling but all outbuildings, swimming pools, tennis courts, patio’s, decorative walling, pathways, driveways, boundary walls and fencing. Additionally, architects fees, surveyors’ fees and removal of debris all need to be included within the building sum insured.

For your contents, you will need to know the replacement cost ‘as new’ of the contents within your home. More information about how to have these professionally valued will follow in a later article.

By contrast, a typical insurance policy for the less valuable home will be rated on the number of bedrooms in the property and will provide cover for buildings up to (for example) £1,000,000 and contents up to £50,000. So, the need to calculate the actual sums insured is taken away from the policyholder as an off the shelf bedroom rated policy will often be suitable for them.

If you would like to discuss a high or ultra net worth home insurance policy and the setting of the sums insured then please give us a call on 01903 791340, ask for Julian or Colin and we will be pleased to assist.

How to choose a high net worth or ultra net worth home insurance



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