Insurers love jargon and call insurance that protects the assets of wealthy individuals high net worth (HNW) insurance. It is non-standard, tailored cover to suit your needs. It has better terms, fewer exclusions and usually comes with some risk management help too. Because you’re worth it.
1. What is HNW insurance?
High net worth (HNW) insurance is the kind of cover we would all like to have but most cannot afford. So instead of packaged-up standardised policies with exclusions and limits that compete only on price, it is individually put together to meet your needs.
And it is backed by far higher levels of service, including faster and more comprehensive claims.
Here’s just one example. In April 2010, the eruptions of Eyjafjallajökull volcano in Iceland caused an ash cloud that made flying dangerous. Flights were grounded across Europe, causing travel chaos.
Every single travel insurer lined up with a magnifying glass to show that the small print in their policy meant they did not have to pay out for cancelled holidays.
Every insurer, that was, except HNW insurer Hiscox. It announced that, even though its policy wording probably did exclude these claims, its customers expected better of it and it would pay in full.
It was genius. All other insurers were later forced to pay out by the Financial Ombudsman, and some even fought that in court. Hiscox has a different attitude.
Peter Burkert, of insurance broker Lark, says: “HNW insurance means less hassle, less onerous, extended cover, with the availability to buy additional products, providing a portfolio mentality.”
2. How will I know if I am high net worth?
It’s less a measure of your wealth or the kind of assets you need protecting, than of your attitude.
Barry O’Neil, managing director of Home & Legacy, the HNW offshoot of Allianz, says: “There tends to be a trigger of some sort that means a standard home or motor insurance policy simply does not meet the needs of affluent clients.
“This trigger can be the rebuild value or size of the property – over £1m or more than six bedrooms, or more than £200,000 worth of general contents.
“If the client has high-value items such as jewellery or collections, this would be another trigger – for example, a £50,000 Rolex would be beyond the range of most standard home insurance policies. A motor insurance policy may need to cater for multiple cars and several drivers, and may include high-value and high-performance cars,” he says.
3. How do I buy HNW insurance?
You won’t buy HNW insurance online and certainly not on a price comparison site. You need to speak to an insurance broker. You’ll meet face to face and they will visit your home and probably carry out a proper survey to make sure everything is covered and everything is as secure at it can be.
Justin Gott, head of art and private client at Hiscox, says: “At the higher value end of the market, there is no one-size-fits-all insurance solution, so a broker will be able to help when it comes to getting the right level of cover.
“They know the specialist insurers who will have more relevant expertise and can guard against common pitfalls such as underinsurance. As many as 55% of high-value homeowners are underestimating the true value of their possessions – some by as much as 40%.
“It’s only natural. The reality is that we all accumulate things as we go through life. Items are replaced with newer, better models, our interests broaden, we take up new leisure pursuits and perhaps our family grows or we inherit precious heirlooms.”
4. What can I insure?
- Your homes (plural), including overseas properties
- Your cars, including classic collections and high-performance vehicles, for multiple drivers (family and staff)
- Your yacht, powerboat and even your helicopter or plane
- Art or other valuable items or collections, including for transportation, storage and exhibiting
- Jewellery, from pearls to Rolex watches
- Travel for you and your family, together, or independently, for business or pleasure
Crucially, the majority of your possessions are likely to be covered under a single policy with worldwide all-risk cover built-in.
5. What can’t I insure?
Burkert says: “In terms of possessions, there is nothing you can’t insure.” Beyond possessions, your broker is likely to be able to find a solution too. HNW individuals often have businesses and other interests, and HNW insurers can often provide encompassing cover for non-personal risks too.
6. What can I expect if I need to make a claim?
Well it won’t be a call centre in India. You’ll have a dedicated claims handler within your broker. The insurer will settle most claims quickly – they will have already known what possessions you had and how much they were worth, so there will be no arguing or delay.
And there will be no trying to tell you that you can buy it cheaper elsewhere or that the insurers can deliver you one from their cheap supplier. You will normally get cash settlements for you to spend as you see fit. You can hire your preferred builder or buy from your favourite shop.
And if you need to move out of your home or have a hire car, the accommodation provided and the vehicles offered will be of a similar standard to your own home and car.
Gott says: “Any insurance policy is only really tested in the event of a claim. Many standard policies have restrictive terms, such as replacement cost only (not new for old on contents), an average clause (which means the claim is reduced if there is underinsurance) and restricted limits, to name just a few.
“With a high net worth policy though, customers will find more is covered in the first place and fewer exclusions apply. We try to make it as easy as possible for our customers, with jargon-free policy wordings and an expert claims team that is adept at dealing with large and complex claims.”
7. How much will HNW insurance cost me?
You may think that if you need to ask about the price, it’s not for you. But insurers say most HNW customers are savvy consumers and keep a sharp eye on prices. The cost, they say, is not much greater than buying standard separate policies covering similar sums insured.
The key is that the cover is comprehensive and the service better. And that’s worth the little extra.