Owning a valuable collection is both a source of pride and a significant financial commitment. Whether your interests lie in fine jewellery, rare watches, artwork, gold or other treasured possessions, these assets can often appreciate over time. Protecting them with appropriate insurance is therefore essential. Yet research shows that underinsurance remains widespread among affluent clients. Without adequate cover and accurate valuations, a loss could result in a substantial financial shortfall.
Recent industry research highlights the severity of the issue. According to a survey of brokers specialising in high-net-worth insurance, 68% believe that underinsurance is more of an issue for affluent clients than ever before. The same research found that 25% of brokers believe all high-net-worth clients are underinsured*, often due to valuations that have not been updated for several years. Jewellery, contents and watches continue to be among the categories most likely to be underinsured. These findings reinforce the importance of specialist insurance guidance for clients with valuable and complex portfolios but also the importance of valuations. Ultimately, it is the policyholder’s responsibility to advise of an accurate sum insured for their assets but naturally, the most reliable way to do this is by carrying out regular valuations.
Why underinsurance occurs
Underinsurance arises when the sum insured on a policy does not reflect the true current value of the items covered, i.e. it is less than the true value. For private clients, this frequently occurs because valuations have not been updated to account for market movements. Brokers report that out-of-date valuations are one of the top reasons clients are underinsured, alongside a lack of awareness of rising rebuild and replacement costs and attempts to reduce insurance premiums by lowering cover levels*.
Luxury goods are particularly susceptible to rapid changes in value. The market for high-end watches, fine jewellery and other collectable items has seen notable growth in recent years, driven by scarcity, demand and broader economic factors. Without professional valuations at appropriate intervals, policies can quickly become outdated, leaving clients exposed at the point of a claim.
The dangers of underinsurance
Underinsurance can still have serious consequences for private clients, even where an average clause does not apply. If an insurer believes that the value of a property or another insured section has been misrepresented, whether recklessly, deliberately or carelessly, they may apply a remedy to the policy. This could involve charging an additional premium to reflect what would have been payable had the correct value been declared, or, in more serious circumstances, voiding the policy altogether. Such outcomes can result in significant financial exposure at the point of claim, particularly where high value or irreplaceable items are involved.
Read our Underinsurance: Overlooked Risk For High-Value Homeowners, which delves into how underinsurance can affect both property and contents.
The risks are heightened for owners of collections that grow in both size and worth. Research shows that three in five high net worth collectors are concerned their art and collections are underinsured, with a large majority noting that the value of their assets has increased in the past year and is expected to continue rising**.
Which types of collections are most at risk?
Certain categories of collections are particularly vulnerable to underinsurance due to the way their values fluctuate. Collectables require distinct approaches:
- Jewellery: Precious metals and gemstones fluctuate in market value. Without frequent professional appraisals, jewellery can be significantly underinsured.
- Luxury Watches: Some brands and models have seen rapid value increases, influenced by scarcity and investment demand.
- Art: Values are shaped by artist reputation, auction performance and broader market trends, making expert valuations essential.
- Gold and Precious Metals: These are inherently volatile, with prices influenced by global economic conditions.
- Other Collectibles: Items such as rare coins, wine collections, antiques or memorabilia often have unique valuation characteristics that demand specialist attention.
Using a specialist adviser ensures these categories can be properly assessed and insured.
Why specialist advice is crucial
Generic high-value contents or personal possessions insurance is often inadequate for high-value collections. Standard policies may include per-item limits or overall caps that do not reflect the actual value of assets. Owning several high-value items can easily exceed default limits, leaving significant gaps in cover.
Specialist insurance solutions, designed specifically for private clients, provide bespoke protection to reflect true value and risk. At McClarrons Affinity, we take the time to understand the nature of your collection, your lifestyle and your wider risk profile. Our role is to guide you through a comprehensive review of your assets, recommending professional valuation services and ensuring your policy aligns with current market values.
Our approach includes regular reviews of your cover to ensure that sums insured remain accurate as values evolve. We also provide expert advice on how insurance works in practice, including how valuations affect claims and why regular reassessment is key.
Practical steps to help avoid underinsurance
Avoiding underinsurance begins with regular professional valuation, tailored to the type of assets you own. Insurance should be reviewed at least annually, taking into account new acquisitions and changes in market value. Working with a specialist adviser helps ensure policies are structured correctly for high-value items, while thorough documentation, including receipts, certificates of authenticity and detailed descriptions, supports both valuation and claims processes.
Taking these steps provides greater certainty around the level of protection in place and significantly reduces the risk of being underinsured.
Conclusion
Underinsurance continues to be a pressing concern, particularly for private clients with valuable collections. With a significant proportion of brokers recognising that underinsurance is more prevalent than ever, the need for expert guidance is clear.
Collections that grow in value and complexity require more than generic insurance cover. By partnering with McClarrons Affinity, you can benefit from bespoke advice and tailored solutions that reflect the true value of your possessions. Our expertise helps to ensure that your valuable collections are protected with confidence and precision.
For a comprehensive review of your insurance needs, speak to our Art & Private Client team on 01653 602634 or at affinity@mcclarroninsurance.com.
Sources:
**Concern for underinsured art & collections | News | Ecclesiastical
