Unique assets require unique insurance

Many investors own alternative assets as part of a diversified portfolio, but the unique nature of these assets means they require bespoke insurance to protect against loss

NFU Mutual
(Image credit: NFU Mutual)

If you’ve got valuables in your home, it’s sensible to keep an eye on what they’re worth. This might seem like an obvious statement at first. After all, if you paid for the item in the first place, you’re going to have a good idea of what it’s worth, right? However, it can be easy to underestimate the value of such possessions, especially if you haven’t had them valued recently as markets for certain items, particularly collectable items, can move quickly.

Of 1,000 people surveyed by NFU Mutual in January 2024, six in 10 High-Net-Worth Individuals considered themselves to be collectors, making them even more susceptible to the risk of undervaluation and underinsurance.

Underinsurance means the amount you’re covered for by your insurance is less than the cost of replacing or repairing your precious items. This can happen when the valuation of items you own is not up-to-date, either due to a lack of information or a fast-moving market. That’s why it pays to stay on top of market trends, have your items valued regularly and contact your insurer if you believe there’s been a sudden change in the value.

Understanding the value

The risk of undervaluation is perhaps most prevalent when it comes to jewellery, especially gold jewellery. The price of gold and other precious metals has surged over the past few years. According to the Royal Mint, the price of gold is currently trading at just over £1,900 per ounce, up £435 in the past five years.

Mark Smith, Managing Director at one of NFU Mutual’s carefully selected valuation partners, Quastel Associates, explains: “The main reason gold is at an all-time high is instability in the world. The wars in Ukraine and the Middle East, and previously, the pandemic, too. People move away from stocks and shares and property and move to safe commodities. This not only affects clients’ gold bullion and coins, but those who have gold content in jewellery.”

It’s all too easy to forget about gold jewellery or even gold bullion if it’s locked away out of sight. That doesn’t stop it from appreciating in value with the rest of the market. Gold is generally thought of as a passive investment, but to ensure you don’t end up out of pocket if the worst should happen, it pays to keep an eye on what it’s worth.

Exciting market

Another market that’s seen a boom in recent years is the whisky market. The record for the world’s most expensive bottle of whisky was broken last year after a bottle of Macallan 1926 went for £2.1m at a Sotheby’s auction in London. But it’s not just the high-end stuff that’s been going up in value. 

At the end of last year, Investment bank Noble & Co said analysis based on about 8,500 transactions of “fine and rare” single malts showed prices for the year had fallen 7%, but this followed a 19% jump for 2022. Despite the weakness last year, it remains an exciting time for whisky collectors. Mark at Quastel Associates says: “It comes down to a few magical things that affect value: age, rarity, the distillery and importantly it’s also about brand, such as Macallan.” The most sought-after bottles will remain in demand, and prices will likely continue to rise, that’s why it’s important to stay up-to-date with values and the market.

Time and value

The luxury watch market has also seen an increase in recent years. Whereas in the past, you could walk into a showroom and buy an expensive watch, today, the market is much more exclusive. There are long waiting lists as companies can’t or don’t want to keep up with demand. To get your hands on these watches, you’ll need to try and get your name on a waiting list or have a pre-existing relationship with a buyer.

As this dynamic has unfolded, second-hand demand has boomed. Today, luxury watches might fetch prices far higher than their retail price, and that’s why it’s more important than ever to maintain regular valuations for these pieces - it might cost far more to replace the item than you paid for it in the first place.

No one wants to spend time worrying about how much their valuables are worth, and worrying if their insurance valuations are up-to-date. That’s where NFU Mutual Bespoke Home Insurance can help with trusted partners who can, for a fee, provide a valuation of your belongings.

NFU Mutual Bespoke Home Insurance is specially designed to cover high-value homes with contents over £150,000 which can be tailored around you and your lifestyle to help give you the peace of mind that your most valuable possessions are in safe hands.

To find out more go to nfumutual.co.uk/bespokeinsurance and click the “Get a quote” button to complete our online form, or call 0808 303 7399

The National Farmers’ Union Mutual Insurance Society Limited (No. 111982 ). Registered in England. Registered office: Tiddington Road, Stratford-upon-Avon, Warwickshire, CV37 7BJ. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. A member of the Association of British Insurers.