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The need for high net worth property insurance


If you own high net worth property, it is more or less taken for granted that you want to protect the considerable value it represents.

But what is high net worth property? It features largely in the overall picture of the UK’s wealth. Land and property account for 51% of the country’s total net worth, according to RBC Wealth Management, compared to just 39% in the United States and 26% in Germany.

As recently as two years ago, London had the highest concentration of high net worth individuals in the world, noted the Syndicate Room – with New York trailing in second place.

High net worth individuals (HNWIs)

Several years ago, HM Revenue and Customs defined high net worth individuals as those worth between £10 million and £20 million or more (in assets, including property, less debts).

A previous definition put the threshold at over £20 million, explains a report by the National Audit Office (NAO), when the number of such high net worth individuals in the UK stood at around 6,500.

As property prices across the country have risen steadily since the publication of those statistics, the number of high net worth individuals has risen accordingly – and with that growing population, of course, is the number of high net worth properties.

High net worth property insurance

Although wealthy individuals invariably own high net worth (HNW) properties, HNW homes may come in all shapes and sizes and may not necessarily be owned by an extremely wealthy person. 

Their uncommon value might be virtue of its location – especially desirable addresses in London, for example – or thanks to its architectural interest, its historical importance as a listed building, the unusual characteristics of its construction (a thatched roof, for example), or the sheer quality and exclusivity of its design and build.

In those cases, high net worth property insurance is essential to protect the investment locked up in the building. In the worst-case scenario in which the building is completely destroyed, only an adequate building sum insured is going to provide the compensation with which to reconstruct such an expensive property.

As we argue in our Complete Guide to High Net Worth Property, the insurance not only requires a sufficiently high valuation on the potential costs of reconstruction but, it also needs to be flexible and individually tailored to suit the distinctive, individual features and characteristics of different property types. The value might be reflected in the home’s location, the building itself, or its grounds and surroundings.

The contents

The assets of any high net worth individual are also likely to include more than the building they own. Collections of art, jewellery, wine cellars and many other high-value items may be found within their homes. In fact, anyone who has contents valued at over £75,000 may typically require high net worth property insurance to protect their assets against the ravages of fire, theft, flooding, damage and loss.

As with any contents insurance, the high net worth property insurance needs to reflect a careful, itemised inventory of every room in the home to ensure there is adequate cover for the repair or replacement of damaged, lost or stolen artefacts of potentially considerable value.