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2 July 2021

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Are you insuring your valuables for the right amount? It could cost you dearly

The real value of your assets

You know how much you paid for your home and you probably have a fair idea of its current market value. However, could you accurately estimate how much it would cost to rebuild? For insurance purposes this is the price that matters. You’ll need to consider not only the building costs and any special features, but also site clearance, professional fees and easy-to-forget items like re-landscaping the garden after the builders have left. It’s easy to see why you need expert advice.

Likewise, do you regularly update how much it would cost to replace your valuable possessions – jewellery, watches, art, wine, classic cars? These items are accrued over time. So, it’s easy to overlook their increasing value, or in some cases, their decreasing value.

Remember, what matters for your insurance is not what an item cost when you bought it, but rather what it would cost to replace it.

The problem with under-insurance

Under-insurance is an increasing aspect of personal insurance, particularly, if you own more than average. Data monitor research indicates that as many as three-quarters of high-net-worth households are likely to be under-insured. If you don’t make a claim it doesn’t matter. But if you have to, and you are under-insured, your settlement will be reduced by the ratio of your overall under-insurance. Sadly, it means you won’t be able to buy a like-for-like replacement without adding some of your own money to the insurance payment.

All things bright and beautiful

Jewellery is perhaps one of the most problematic areas. The price of precious metals and gemstones can fluctuate significantly according to global demand and supply, or social/political circumstances. A simple example is that UK valuations are normally based on Dollar or Euro prices. The current weak pound will have a marked effect on these values.

For example, gold is trading at its highest price for 7 years and is around 30% more expensive than it was a year ago. Whereas, Platinum, a favourite metal for engagement rings, has been steadily falling in price since a peak around 2012 and is now 30% lower than 7 years ago. Silver has nearly halved in price in the same 7-year period but, nonetheless, has been stable for the last 5 years.

Diamonds also ebb and flow in price and stones over 3 carats tend to fluctuate the most. Vintage watches, on the other hand, have exploded in price over the last decade, due in part to rarity but also to increasing knowledge.

Remember also, that art and antiques can increase in value in a very short time. Trends in art buying – such as the current vogue for post-World War II artists – or the death of an artist – can create significant price changes. Classic cars are another asset where prices have risen dramatically – an average of nearly 200% in the last decade.

The importance of an up-to-date valuation

This underlines the importance of having your treasured possessions professionally valued at least every three years to ensure the values are up-to-date, and to avoid disappointment, in the event of a loss.

It’s all in the detail

The description on the valuation is also important. One that simply states … “Solitaire diamond ring: £20,000” … is unhelpful. There needs to be details of carat, grading, mount, antique or modern and, possibly, designer. This level of information is vital when seeking and costing the right replacement.

Centor’s Private Client Manager, Ricky Downs, comments:

“We don’t want our clients to suffer a financial loss when they make a claim. Having their jewellery and art valued, at a minimum of every three years, will help ensure that they can buy like-for-like replacements.”

Ricky Downs

Private Clients Manager

020 7330 8725