Solicitors: Everything you need to know about insurance for High-Net-Worth clients.
For many solicitors, having a good relationship with a reliable and experienced broker can be a brilliant asset when they are dealing with property purchases for High-Net-Worth clients.
Insurance can be one of the things that is left to the bottom of the list when purchasing a property, but for many High-Net-Worth clients, the property they are buying is often complex. In this blog, we will look at the specialist conditions on typical High-Net-Worth residences, the reasons why insurance needs to be planned in advance and how it’s critical for making sure a property sale can go ahead.
What are the insurance needs for HNW individuals?
Many High-Net-Worth clients will need insurance for their primary residence, but they may also have a second property as a weekend home or holiday home, either in the UK or overseas. In some instances, they may also have property to let.
If properties are overseas or require additional vehicles, the client might end up with multiple policies, which is time consuming to source and manage on an ongoing basis. Working with a specialist, independent insurance broker is a great way for High-Net-Worth clients to get a single policy to meet all their requirements. This will provide one renewal date, one insurance premium and one point of contact for all their insurance needs.
How can an insurance broker help a conveyancing solicitor?
A conveyancing solicitor is responsible for the legal purchase of a new property. Insurance is always required before the exchange of contracts. Not only is this a legal requirement if the property is mortgaged, a High-Net-Worth client will also need to insure their contents, such as art, jewellery, furniture and personal belongings when the property purchase is completed, so that they have sufficient cover for when they are ready to move in.
Sometimes, High-Net-Worth clients don’t move straight into the property at completion; particularly if they client is planning a renovation project. This information is crucial to know as some of the circumstances might prevent them from working with certain insurance firms due to the level of risk.
No matter what the client’s circumstances are, there will be an insurance product available for them. However, each scenario will carry a different level of risk and the insurance solution will need to be designed based on the plans the client has when buying a new home.
How can a conveyancing solicitor help a High-Net-Worth client with their insurance needs?
Conveyancing solicitors are ideally placed to provide detailed information about any issues facing the property, which may impact the insurance cover that the client can take out. This could involve any potential flooding issues, subsidence or any covenants on the property. This information will be crucial for a High-Net-Worth insurance broker looking to secure property insurance for clients.
What solutions would a HNW individual need to consider and how can their solicitor advise?
Many of the properties that High-Net-Worth clients purchase are very high-end and are sometimes considered non-standard properties. This means that calculating the reinstatement value for the property is a specialist job, which would need to be carried out by a Chartered Surveyor. Although most insurance firms offer a reinstatement valuation as part of the homebuyers survey, there sometimes can be an additional cost and the need for a Chartered Surveyor can slow down the process of securing insurance for the property – which can delay the progress of the sale.
The mortgage lender will also have various conditions such as the first loss payee and co-insured and their interest may need to be noted on the property.
Clients will need to provide a reinstatement value for the property. The most qualified person to provide this advice is a Chartered Surveyor. Most will offer a reinstatement valuation as part of their homebuyer’s survey by you may have to request it and it can be an additional cost. Does the lender have conditions we need to consider such as first loss payee, co-insured or does their interest simply need to be noted on the policy.
How can High-Net-Worth clients make sure they have the correct level of insurance cover?
In many cases, there have been insurance gaps when the exclusions in a policy don’t cover the property for all levels of risk. If a property is unoccupied or undergoing renovation work, there is most likely a need for specialist insurance cover, which a standard home insurance policy is unlikely to provide cover at a sufficient level.
All insurance policies have a building works limit, and the property is not covered if the total contract spend is over a certain amount. For example, if the property remains unoccupied for over 30-60 days, a standard insurer wouldn’t be able to cover the property. This is why a specialist broker will be best placed to find the most suitable insurance policy on the market to cover the circumstances for the particular client.
How can a conveyancing solicitor get support from a specialist, independent insurance broker for their High-Net-Worth clients?
The best thing for a conveyancing solicitor to do is get in touch with our team at the start of the process. We can help you to understand some of the key risks with the client’s property and start to investigate the best insurers who can offer your client favourable terms.
Leaving insurance to the last minute means the insurance broker has less time to gather the risk information and negotiate with the insurers to get the best terms. Your High-Net-Worth client will want to know that their insurance broker has gone out to all relevant insurers on the market to get quotations, which will be based on the most relevant information about the property and the client’s expectations.
Ideally, we’d want to send a proposal to the insurers with all the relevant information, so that the risk is presented in its best form. This will speed up the overall process for the underwriters. Ideally, we’d want a minimum of 2 weeks’ notice or if renovation is involved, minimum of 4 weeks’ notice.
How can Eggar Forrester help High-Net-Worth clients to secure property insurance?
The best way to get things started is a 15–20-minute conversation with the client once the property sale is going through, so that we can fully understand their insurance requirements and their plans for the property. This will give us the time to speak to the best lenders on the market and the client will have time to consider all the viable options without the pressure of having to sign up to a policy for the sale to go through.
We find that having a direct conversation with the client can help them to understand the level of cover they need, why they need it and provide advice on the premiums quoted.
Many High-Net-Worth clients value having a single point of contact and a direct dial number / email should they have any questions about their cover and to handle any future claim.
You can find out more about Eggar Forrester’s comprehensive Private Client Insurance Services here.
Eggar Forrester has an experienced High-Net-Worth insurance team, led by James Liddell. James is an Associate Director and is responsible for delivering insurance solutions to a diverse portfolio of private clients in the UK and abroad. James can also provide cover for residential and commercial real estate, including a single let property or a large portfolio.
You can connect with James on LinkedIn.