Risk Management Portal for RMK Clients
Protecting your assets
The number of high and very high net worth individuals is growing throughout the World. If you are fortunate enough to be one of these you may be able to indulge whatever interest you may have. This may mean collecting art, vintage wine, antique furniture, haute couture clothing, jewellery etc.
Having acquired these treasured items they can take on a sentimental value. Unfortunately should they become lost or damaged the only compensation you can receive is a monetary one from your insurer. It is therefore important to correctly insure the possessions you collect over your lifetime as they may appreciate significantly in value over the years. For example:
Fine Art – can increase or even reduce in value depending on the popularity of that particular style. A new artist selling into the market for the first time may be seen as an unknown and speculative and be valued
accordingly. Over a very short space of time the value of that work may increase many times over as the artist gains in popularity.
Jewellery – values can be affected by the price of the commodity used such as gold, platinum and diamonds. This is complicated even further by the effect of exchange rate changes from your local currency to the
dominant currency used for pricing the commodity. We have recently seen a lot of volatility in the exchange rate for the Euro in relation to the Swiss Franc and the USD.
Vintage Wine – a vintage wine will be an investment grade wine and should appreciate significantly in value over time. The value of an old wine depends a great deal on its “provenance,” which means its ownership
history and storage condition. You will therefore have gone to a great deal of time and trouble to care for your wine. As the wine becomes rarer it will often increase significantly in value.
Haute Couture clothing – if you have the right insurance cover it will replace any lost or damaged items of clothing as new. Some items of clothing, such as haute couture, can actually increase in value over time and
the value of the contents of your wardrobe are often underestimated.
If you were to undervalue any of your possessions then your insurer may reduce the amount of any payment by the same proportion as the under insurance.
What can you do to avoid being under insured?
Well we have the following tips to help you avoid falling into this trap:
- Valuations – Obtain valuations on a regular basis for high value items e.g. every 3 years or sooner if you feel there have been major movements in value.
- Inventories – Carry out a full inventory of your assets. How much would it cost to replace your general contents (including clothing) with new items? An inventory may also be useful if you need to make a claim
as would photographic evidence or a video diary. - New purchases – Keep receipts and advise your broker or insurer as soon as you make significant purchases or disposals.
- Policy cover – Ensure your cover is as flexible as possible with high single article limits and automatic cover for new purchases.
These basic tips should help you to minimise the possibility of under insurance so that you do not suffer a monetary loss as well as a sentimental loss.
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