In Focus: How can HNW insurance policies help manage risks related to high value or risky hobbies?

Robert Read, head of art and private clients, Hiscox UK

Anyone that owns high value artworks, whether they are an art enthusiast or blue-chip collector, needs to consider how to protect the financial and cultural value of these pieces. That begins by choosing an insurer that understands the unique vulnerabilities and values associated with art collections and that offers a policy to reflect this.

Hiscox has collected art since 1973, which gives us a unique perspective when advising our insureds on how to manage and protect their collection as we see any proposals from both sides.

We like to take a light touch and hope that any actions we propose are consensual rather than prescriptive, as well as being acutely conscious that any suggested steps should also be cost effective.

Our aim is to help clients avoid the major pitfalls that may not be obvious to those without our experience.

For example, sculptures in the open can be very tempting for thieves and can be hard to protect – anchoring them and looking carefully at where they are situated are two simple and pragmatic ways we can help.

Accidental damage makes up nearly half of our claims and most happen, not surprisingly, when works of art are being moved. Specifying when a specialist shipper and packer should be used can help mitigate that.

Helena Evans, managing director, Criterion Adjusters

Rare watches and jewellery can cost millions – for example, auction house Sotheby’s New York sold a special Patek Philippe watch from actor Sylvester Stallone for $5.4m (£4.1m) in June 2024. The watch was made for Stallone and he kept it unworn for three years.

This is typical behaviour for collectors who treasure their pieces – they rarely wear them and keep them protected at home.

High net worth (HNW) insurers will cover individual high value items, compared to mainstream insurers which may not accept risks that are over a certain limit. These policies will often include security advice, possibly with the insistence of a safe, to provide added protection and mitigate risk

HNW policies are tailored for the insured and are easy to update when adding to a collection. A wider scope of cover is often provided, featuring – for example – cover for armed robbery, which often includes reward payments, security upgrades and counselling services, to reflect the fact that customers could be at a higher risk of targeted crime.

Of course, the overriding difference with a HNW insurance product is the bespoke, personal service policyholders receive from all stakeholders –including the insurer, broker and loss adjuster – at a time when something happens to their most treasured possessions.

Rupert Beckett, executive director of superyachts, Gallagher

Superyachting as a hobby requires specialist insurance coverage for the owners and managers of these vessels – this is generally based on a bespoke set of requirements and, as such, policies are typically purchased using dedicated brokers, with clients often also being advised by lawyers or superyacht fiduciaries.

There are many risk touchpoints or considerations in this ultra high net worth line.

Policies might include insurance for physical damage to the vessel, such as hull and machinery, third party liability – most commonly protection and indemnity – and crew welfare insurance, covering medical expenses, treatment costs, personal accident and temporary total disablement for crew and guests in the event of illness or accident. 

In my experience, crew welfare is the most active element of these policies from a claims frequency perspective.

Premium is calculated based on the value, build quality, size and age of the vessel, along with other factors such as itineraries, claims history and the competency of the captain and crew.

Of course, there are often additional risk considerations and we have placed policies in respect of submarines, submersibles, remotely operated vehicles, aviation policies for helicopters or waterplanes, mortgagees interest covers for bank loans, war risk extensions – including kidnap and ransom – and loss of charter and charterers’ liability.

Regarding the market size, the number of superyachts has grown exponentially in recent years. Furthermore, the regulatory framework for yachts is complex and has become much tighter over recent years to help protect seafarers – insurance has adapted to cater for this.