With interest rates remaining at historic lows, more and more people are looking into so-called alternative investments. From wine to art to antiques, canny investors are putting their spare cash to work as they seek higher returns. Wine, for example, has proved a phenomenal investment over the last five years with price rises of up to 150% recorded by online fine wine trading platform, Liv-Ex. Such growth is phenomenally attractive but it comes with a risk. Unlike some other investments such as stocks and shares, collections such as these are physical, will often be in your home and are therefore at risk of damage, theft or loss.
In this blog from Coversure Grantham, we’ll look at how you can effectively protect your investment and give you some useful, easy to follow tips on keeping them safe.
Do You Have Adequate Contents Insurance?
If you have a collection or simply one or two specific items that are of high value – be it jewellery, wine, art or antiques – then you need to make sure that your home insurance can cover them. On a standard home insurance policy, contents cover is usually taken out for a specific amount, say £50,000. If you have individual items of great value, then that cover can soon be eaten up and you may find that your insurer will not cover you for them unless they have been specially mentioned. So, if you are in the fortunate position to have these objects in your home its essential that you get correct cover based on up to date valuations.
Valuations are a big concern. Markets for art, wine and antiques are extremely buoyant and prices are rising fast. This is great if you’re the owner of these things, but it’s all-too-easy to find your cover is well-below their current market valuation. For example; there was a wine investor who purchased a bottle of Chambertin 1989 by Armand Rousseau in late 2016 for £1,100 and they took out the appropriate level of insurance on it. In the spring of this year that same collector was astonished to see that the price of that same bottle had risen to over £2,700. Delighted (if somewhat alarmed) she totalled up the rest of her collection and discovered that she was underinsured to the tune of over £25,000. A call to her broker was quickly convened!
How To Protect Valuable Contents
As well as having valuables listed out and with specific cover on your home insurance policy, there are some other ways that you can protect your investments – ones that could also reduce your home insurance premiums. Below are some simple tried and tested suggestions that could save you both money and heartache.
- Keep your collections stored securely – this may sound like an obvious thing to do, but you’d be amazed at some of things we have seen. Classic cars stored in outbuildings with poor or even no security, works of art displayed within grabbing reach of open windows and, my personal favourite, a £250,000 wine cellar stored in a shed at the bottom of a long garden. The owner had built a large investment collection in a short space of time and had moved the wine there as his wife was sick of falling over wooden cases. The garage was close to the garden boundary and, surprise, surprise, an opportunist thief clambered over the fence one night, slipped in and having grabbed a few bottles at random made off with over £10,000 worth. Ouch!
- Fit a burglar alarm and additional security devices – this makes good sense for all homeowners, not just those with collections to house. Once the preserve of the wealthy and requiring specialist installation, these days you can get a web-based solution for as little as £150. Other devices such as window locks, additional locks on doors and security lights can all make your home just that little bit less inviting to a would-be thief
- Store collections in appropriate conditions – valuables aren’t just threatened by thieves, environments can prove risky too. Wine stored in the warmth of the kitchen or worse the fluctuating temperatures of a garage or outbuilding, pictures and antiques left in direct sunlight or delicate objects left where they can be sent tumbling to the floor are all recipes for disaster. Careful placement and investment in things such as EuroCave wine cabinets can reduce both short and long-term risks
- Keep a close record of your collections – when a collection is primarily your passion, as is often the case with these sorts of investments, it’s all too easy to lose track of what you have and what its worth. By keeping an inventory of what you have, you can make it easier to get up to date valuations and it will make life so much easier should you need to make a claim. It will also act as a reminder to contact your insurance broker to update the value of your policy should you add to your portfolio
Contents Underinsurance: A Growing Menace
A staggering 65% of UK homes are currently believed to underinsured according to Moneyfacts, and with more and more people looking to alternative investments this figure looks set to rise. If you would like some help properly protecting what matters to you, then please feel free to get in touch with Coversure Grantham and one of the team will be happy to give you some friendly, impartial advice. You can call us free 0800 308 102 or click here to send the team a message and we’ll get back to you as soon as possible.