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What is High Net Worth (HNW) Home Insurance?


You might well have seen references to high net worth individuals – but how do you identify such a person? How wealthy does someone have to be before they gain the title of high net worth?

The answer, of course, is that there is no absolute standard and definitions may vary quite widely.

Millionaires and billionaires

Some might reasonably assume that a “millionaire” is, by definition, a person of high net worth. According to City A.M. on the 13th of June 2017, Britain now has more than 820,000 millionaires, the fourth highest number of millionaires in the world – after the United States, China and Japan.

What is more, the number of millionaires in this country is growing quickly. Thanks largely to the surge in property prices, one in every 79 people in Britain is now a millionaire, compared to one in 84 at the same time last year, said the Telegraph newspaper on the 6th of September 2017.

According to some sources, Britain claims an even higher proportion of billionaires – second only to the United States.

The Financial Conduct Authority (FCA)

The authoritative FCA has an altogether much broader definition of a high net worth investor – one whose individual earnings exceed £100,000 a year and whose personal assets (excluding the ownership of the individual’s own home) exceed £250,000.

High net worth homes

The FCA’s exclusion of a high net worth investor’s own home is perhaps an odd decision, since one of the common ways of identifying a high net worth individual is through the type and value of the home that they own.

An article in Property Wire on the 20th of July 2017 charted the upsurge in British homes worth more than £1 million – an increase of 195% between 2011 and 2016 alone, and many of these are now outside the expected hotspots of London.

Although their number may be increasing, high net worth homes such as this are distinctly out of the ordinary – they are set apart from many other types of more modest dwellings.

High net worth home insurance

Because they are so out of the ordinary, standard home building and contents insurance is unlikely to provide the scope or level of cover required by a high net worth home. For these very special dwellings, specialist high net worth home insurance is required.

Almost by definition, for example, a high net worth home is likely to be architecturally distinctive and its construction might have employed non-standard techniques and materials. Those non-standard qualities alone may make regular providers of home insurance more than a little wary about arranging cover for a high net worth home – and that any of the insurer’s doubts about the risks to be insured are reflected in much higher than usual premiums.

In short, high net worth property insurance tends to be in a class of its own and, if yours is such a property, you may want the confidence and reassurance of cover provided by a specialist insurance provider with the necessary experience and expertise is arranging such non-standard forms of home insurance.

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