Turn to specialists for cover on quality street

Edmund Tirbutt reports on the upper end of the home contents market

BIG IS not always beautiful, especially when it comes to insuring beautiful things. For better quality homes, standard household policies from large composite insurers are rarely competitive with high net worth policies provided by specialists.

Nevertheless, Hiscox Underwriting, which has the largest share of the high net worth market, estimates that more than 95 per cent of homes with contents worth more than pounds 75,000 either use a standard contents policy or fail to insure their possessions.

Anyone with buildings worth more than pounds 200,000 and contents worth more than pounds 75,000 is likely to benefit from switching to a specialist. (Many do not realise they are in this category because their homes are underinsured.)

"In our experience most savings are between 25 per cent and 40 per cent," says Richard King, director of Artscope International, specialist brokers. "You would also expect to get more flexibility and security, including depreciation cover."

The high net worth players point to a number of factors that make wealthier households better risks. Security is generally tighter, and art and antiques appeal less to burglars than televisions and videos. Owners tend to treat their possessions better and are less likely to make fraudulent claims.

The main savings tend to be on contents. Hiscox's 606 High Value Household Policy, for example, charges no more than 30p per pounds 100 of cover for items such as pictures, books, collections, antiques and furniture. General contents, such as electrical equipment, carpets and clothes, would not cost more than 90p per pounds 100.

This means that a household with around pounds 80,000 of contents (60 per cent general contents and 40 per cent antiques) would pay no more than pounds 530 a year - under half the cost of most standard policies.

High net worth policies can enable numerous additions to be kept in a single tailor-made package. They can extend to second homes, small boats and even to horses and ponies. The approach is more convenient and cost- effective than buying cover for individual components.

The availability of depreciation cover (to pay for loss of value as well as restoration in the event of damage) is also of paramount importance when art work or antiques are involved.

The value of a slightly damaged piece of Chinese porcelain after repair could, for example, be only half that of an identical undamaged piece. Nevertheless, a standard household policy would only pay for the cost of repairs.

Depreciation cover is offered by all the four main established high net worth players - Hiscox Underwriting, Cox Underwriting Services and Wellington Personal Insurances, which are all Lloyd's service companies.

Masterpiece is a dual venture by Chubb Europe and Sun Alliance.

"The four main players have gone to great lengths to get it right and in most cases there is no need to look further afield," says Beryl Anstee, underwriting manager at Towry Law. "They can give you the best cover at the most competitive premiums and have an excellent record when it comes to claims paying."

Their policies, while taking a broadly similar approach, all have their own idiosyncrasies.

Wellington's Gold Cover, for example, is unusual in having an extension for private motor vehicles (including collector's cars), while Cox's Personal Insurance Portfolio is notable for offering free annual travel insurance for the entire family.

A minefield of smaller print variables in fact makes it difficult to select the policy most suitable for one's own particular needs. The help of a specialist intermediary is essential in most cases. Even the product providers themselves tend to direct inquirers towards a suitable broker.

Towry Law (Slough branch), Artscope International (Farnborough) and Penrose Forbes (Banbury) are all intermediaries with good reputations. Such specialists, while primarily inclined towards the "Big Four", can also draw on their knowledge of certain niche players.

Norwich Union's Highline can be especially competitive at the lower end of the market, while those with unusually valuable art collections may benefit from dealing with Nordstern Art Insurance.

Independent's Home by Design is also well thought of. It provides policyholders with a free comprehensive appraisal of the home, which includes advice on security and risk management.

Particular care should, however, be taken over many of the newer policies.

Experts stress that some pricing is unrealistically low and that some of the wording in the policies often leaves much to be desired.

They also say that composite insurers, while not providing high net worth schemes as such, are offering massive renewal discounts on standard household policies in a deliberate attempt to rival the specialists.

They are, however, simply providing high sums insured without tailoring the cover to clients' needs, say the experts.