Under Pressure – The Exponential Growth of Underinsurance

The Exponential Growth of Underinsurance

As 2023 drew to a close, I look back on the year and reflect on the subjects I have found myself discussing most and even on the morning of the 27th of December at 9am I received a call from a long term client of ours whom is not only well respected, but incredibly astute, and this case highlights without a shred of doubt, the biggest problem in our collective industry currently.

A client of theirs is looking to insure a collection of jewellery with insurance values ranging from £1,000 – £20,000 – individually not huge sums, but collectively a significant amount. The figures have been gathered through somewhat standard avenues of what was paid for the item and “what we think it is worth/or worth to us”.

In my estimation, the collection is probably underinsured by a figure close to 50%, and on some individual items, close to 75%. We are now working out when we can get to the client as soon as possible in the New Year.

Whilst it may have been considered the ‘elephant in the room’ for many years, brokers and insurers are now discussing the problems that underinsurance can cause. We all know that the implications of underinsurance can be catastrophic, but how do we pass that knowledge on to clients and give them the knowledge that they need to make an informed decision about their cover, and having a professional valuation?

A recent example occurred during the summer, of which I was part of the team assessing a large estate that had been inherited from parents of a well known farming family. The figures provided were done so in the mid 1990s, and index linked from that date, with a figure of around £250,000 for the entire contents of the property.

Following the valuation, the figures were certainly surprising to the client, and the broker.

  • A general contents figure of £200,000
  • An antiques and collectibles figure of £210,000
  • A silver figure of £101,000
  • An art figure of £210,000

What astounded me is that despite being a heritage property, the insured still had all the contents in one general contents pot, with no specific categories indicated on their policy. Following the valuation, the client and broker now have a far better image of what they are insuring with correct figures for different areas, representing far better value for the client and a far better risk evaluation for the broker and insurer.

A recent survey completed by one of the biggest insurers of hight net worth clients in the United Kingdom has revealed that 67% of their clients need more guidance and assistance with their collections. This offers great potential for brokers to have the conversation with their clients about how they can help and offer an ever greater service.

What is clear is that the market is changing, with people’s tastes moving from more traditional avenues of collections and investment. The same survey indicated that 44% of high net worth clients invested in jewellery, and the same percentage in watches, which have both seen exponential growth in the last decade.

The great opportunity that a valuation always offers for the client is not only knowing the value of specific items within their collections, but also the figures of the collection total in addition to the individual items mentioned previously, so one can gather a ‘snapshot’ of the property.

So, should the subject of under insurance still be swept under the rug? Well, if its increased in value by 60% in the last five years, probably not.

Recent classic and collector car market trends mean you’re probably under-insured

Since the full force of the coronavirus pandemic hit in the spring of 2020, we have all experienced unforeseen ups and downs in many aspects of our lives.

Whilst it doesn’t begin to compare to what many people have suffered over the last three years, the classic and collector car market has also experienced significant turbulence and unpredictability in relation to values.

As a result, many classic car owners are very likely to be under-insured with out-of-date valuations and would find themselves heavily out-of-pocket in the event of a claim.

What has been happening in the market?

Having experienced something of a dip towards the end of 2019, classic and collector car market values spiked considerably not long after the first lockdown came into force at the end of March 2020 – according to recently released price index data from the insurer Hagerty.

Stuck at home with little to do and unable to go away on holiday, buyers spent significant amounts of money on classic cars; with the increasing demand pushing values sharply upwards. With physical dealerships closed, online classic car auction platforms with detailed photographs and thorough descriptions provided a low risk route to purchase.

These digital-only outlets, such as The Market by Bonhams in the UK and Bring a Trailer in the US, reported record sales figures during 2020.

As the world went back to work during 2021, average market values cooled a little but the rising cost of living and then the invasion of Ukraine in early 2022 caused higher fuel prices and a more significant dip.

Where are we now?

The first data points of 2023 show that average values in most classic car categories are now well above where they were pre-pandemic.

The category that has performed the best over that period is what Hagerty tracks as their Gold Index. This segment includes top-end collector cars such as the Mercedes-Benz 300SL Gullwing, Ferrari F40 and Ford GT40, and shows an average market value increase of 21.4% since late 2019.

Not far behind on a 17.4% increase is the Hot Hatch grouping. These are the cars that Generation X-ers wanted to buy in their late teens and twenties but couldn’t afford. Now in their middle-age with a greater disposable income, fast Fords and GTIs are being snapped up in waves of nostalgia.

Less than a percent adrift are the Best of British cars at +16.6% and at an 11.4% increase is the Classic category which represents the “everyman” classic cars and by far the biggest slice of the market.

Is your car under-valued?

Based on these findings, there is a very good chance that unless you’ve had your car valued recently, it will be under-insured.

Indices such as those from Hagerty are based on market value averages across a range of models, so it is important to get a valuation not just on the make, model and year of cars that you own but for your actual cars in their current condition and with any particular history or provenance.

Market valuations – what you could expect to sell the car for – are most appropriate for valuing assets for probate, inheritance tax or division of chattels, but you need to value cars differently for insurance purposes.

An insurance valuation assesses what it would cost to replace a car if it were stolen or badly damaged and could include all manner of additional expenses beyond the purchase price of a similar car or just the cost of repair – particularly if the car is a hard-to-find model or requires specialist parts and extensive labour to restore it to your particular specification.

Get an up to date valuation

At Doerr Dallas Valuations, we usually recommend revaluation at least every 2-3 years to incorporate market trends. Never has this been more important than now due to the heavily fluctuating classic and collector car market.

Get in touch with us to discuss how our independent team of specialist valuers can help to make sure your cherished vehicles are properly covered.

The Importance of Keeping Your Values Up to Date and How to Avoid Under Insurance

Over my 28 years working in the Private Client industry working for specialist insurers, and consulting in the High Net Worth (HNW) space, I have seen numerous cases of inadequate cover. Incredibly up to 75-80% of HNW homes are estimated to be underinsured (Datamonitor report 2015).

I recall going with a broker to see one of their clients in London to review the value of their contents and valuables. The client’s wife casually enquired what the general contents were covered for and I’ll never forget her response when she was informed of the amount … ‘darling, that wouldn’t even cover my handbags’ – which incidentally were ‘serviced’ annually in New York. The sums insured were subsequently reviewed and there was a more than threefold increase in cover.

In another example, following an unfortunate fire at a substantial home, the total contents cover was almost exhausted in one room where the curtains alone were worth £70,000. They were completely damaged by smoke, rather than the fire itself. Whilst the insurer was sympathetic to the client’s position, they had not received adequate premium as the sums insured were hugely understated, and the insurer asked the client to pay backdated premium for the correct sums insured. The broker involved was grateful for the insurers approach, although had not spotted the degree of under insurance.

Why are HNW homes more at risk from underinsurance?

Value of certain items increase over the years such as jewellery, art and even wine.
Items made of precious metals and valuable stones are highly influenced by fluctuating markets, which can lead to significant increases.

Bill Baker of Porticus Insurance Consultants Ltd, a specialist HNW broker based in London commented on his experience:
‘We recommend that our clients’ jewellery is valued every 2-3 years to avoid under-insurance. We know many are not properly covered and when they do have a new valuation, we see very significant uplifts in values. We also regularly see under-insurance of contents in the high net worth sector. The replacement costs of contents in a typical detached family home can easily be £250,000 or significantly more depending on the quantity and quality of clothes, shoes, handbags, carpets, curtains, sports equipment and furniture’.

So how do insurers deal with under insurance at the time of a claim?

HNW insurers stipulate in their policy terms that items of contents and valuables need to be insured for their full value, and their adequacy will be reviewed at the time of a claim. If the amount is not adequate, they will require as a minimum that the sums insured be revised, and the correct premium collected. At worst they can potentially void the policy if there is deliberate misrepresentation, and or non-disclosure.

These insurers often individually list on the policy items over a certain value for jewellery, art and precious metals, and then cover them on an ‘agreed value’ basis. At a time of loss, the insurer will pay out the amount on the schedule, although not a higher amount if the item costs more to replace, which can be the case if the item has not been recently valued.
Most non-HNW insurers will apply average, where the amount paid out is proportional to the amount underinsured, so if the underinsurance amount is 50% for example, then only 50% of the claimed amount will be paid.


How to avoid underinsurance:

  • Have a professional assessment by a specialist valuer such as Doerr Dallas Valuations, to keep the values of your contents and precious items current. They offer an initial walk through valuation for £500 plus VAT, which will highlight any underinsurance on contents, as well as comment on the adequacy of jewellery cover. If there is significant underinsurance a full valuation will be recommended
  • Review your sums insured on a regular basis, considering movement in prices, for example the recent increase in gold prices
  • Undertake a full review of your home contents, including carpets and curtains, clothing and shoes, sports equipment, and items kept in cupboards, garages and garden rooms
  • Speak to a specialist HNW broker, who will offer you independent professional advice about how to protect your valuable assets, and recommend a suitable insurance policy for your needs

The Importance of Consulting Industry Recognised Art Specialists

Reports in the press recently about fake paintings loaned to a country house in Scotland and the London art dealer who paid £1m for a painting and proceeded to sell it on for £8m, highlight the importance of consulting recognised industry specialists when buying or considering selling. Unfortunately, these examples are only the ones in the press and not the works we see where clients have overpaid or the works are not right and we are the bearer of bad news.

This then reminds me of a very sad story that happened nearly 50 years ago, when I worked on the front counter at Christie’s, King Street.

A middle-aged man came to the desk with a large canvas of Diana and her hand maidens, wrapped up in brown paper and string. He said it was his family’s ‘Rubens’ and he wanted it valued. By pure chance, Christie’s Old Master Department had just taken on Gregory Martin, who for the previous 10 years had been curator of Flemish paintings at The National Gallery and was a Rubens expert. He examined the picture and pronounced it an old copy worth £1000-£1,500. I went back downstairs with the painting, wondering how best to break the news. He took it very badly, the blood draining from his face and slumping backwards into a chair. I bought him a cup of hot sweet tea like you do for trauma victims and he told me the story of how the painting came to be his.
His father had died a year ago and as the elder son, he was allowed first choice from the collection. The ‘Rubens’ was undoubtedly the most significant thing in the castle, and he had always loved it, so that was what he chose. His younger brother got everything else, which amounted to a little over three hundred paintings. I just prayed his brother was the accommodating type.
If only he’d taken a second opinion from a recognised specialist in the field of Old Master paintings prior to making his final choice. Please don’t make the same mistake.

In the art world there are many different genres of works and consequently experts who are authorities in their chosen field. Here are a few of our specialists who help to showcase the breadth and depth of knowledge we offer to our clients.

David Dallas,
Old Masters Specialist

David Dallas joined Christie’s in 1969, where he was the youngest person in a Technical Department (Old Masters). He subsequently became deputy head of the Picture Department at Phillips Son and Neale and ended his auctioneering career as International Director (Global Head) of Old Masters at Bonham’s in January 2015.

In between he worked for more than twenty years with Johnny Van Haeften, specialising in Dutch and Flemish paintings of the 17th Century. He is a specialist in British Landscape Paintings 1750-1850.

He was for many years on the Vetting Committee of the Summer and Winter Art and Antiques Fair at Olympia and Chairman of the Picture Vetting Committee at Grosvenor House Fair and has also been on the vetting committee of Masterpiece. He is a trustee of the Reading Foundation for Art, a former Chairman of The Friends of Readings Museum and Gallery and an external advisor to the Collections Committee of Eton College.

Jonathan Horwich,
Modern British Art Specialist

Jonathan Horwich began his career in the art world in 1973 with the picture dealer Thomas Agnew. In 1976 he joined the picture department of the recently opened Christie’s South Kensington, where he valued and catalogued their many multi- discipline picture sales. He was involved in all aspects of ‘CSK’s business including their innovative ‘ Roadshow’ valuation days held at locations across the UK. Jonathan became a regular auctioneer from 1984 onwards and an Associate Director in 1985.

In 1987 Jonathan was recruited to join Christie’s in King Street as Director and head of the Modern British picture department. During this time Jonathan continued as an auctioneer and gained a strong reputation for the sale of single owner Modern British Art collections, including those of Frederick Forsyth , Peter Meyer and many others and also became recognised as an expert in Modern British Art. In addition to his role in Modern British at Christie’s, Jonathan was appointed head of British and Irish Art in 1998, International Director of the 19th European picture department in 2003 and Deputy Chairman in 2006.

After 22 years at Christie’s King Street, Jonathan joined Bonhams in late 2009 as Global Director of picture departments, where he continued his involvement with Modern British auctions, while at the same time building up Bonhams worldwide picture auctions. This included setting up Impressionist and Contemporary sales and departments in London and New York. In January 2016 Jonathan was recruited to join Phillips in London as a Senior Specialist Director with a focus on Modern and Contemporary British Art a position which he held until December 2018.
Jonathan is recognised as an expert in the Modern British field and maintains close links with experts and galleries and also keeps abreast of all current market developments, trends and issues. Jonathan has a particular interest in and knowledge of the work of L.S. Lowry. As a result he has appeared on ITV’s ‘ Looking at Lowry’ and a Lowry focussed episode of the BBC’s ‘ Fake or Fortune’ .

Jonathan serves as a Council member and Steward for the Artists charity, the Artists General Benevolent Institute (AGBI) and is a member of Chelsea Arts Club.

Ben Hanley,
Contemporary Art Specialist

Ben is an established contemporary art specialist. He began his career working in the Old Master and 20th Century markets before moving into the contemporary market. He has over 20 years’ experience working in the UK and international art markets.

A graduate of Trinity College Dublin and the Courtauld Institute of Art London, Ben has developed specialist level knowledge in Old Masters, Impressionist, Modern and Post War & Contemporary art. In addition to this Ben has extensive project management experience having curated and produced over 100 art projects spanning highly complex multi-venue festivals to smaller bespoke events. He has worked with governmental, institutional and commercial partners including the National Gallery, V&A, the Serpentine Gallery, the Courtauld Institute, Christie’s, Sotheby’s and the Russian Ministry of Culture.

Does Your Current Insurance Reflect Art Market Increases?

Yayoi Kusama –
KOKORO (Heart), 1988

We asked our Head of Contemporary Art, Ben Hanly, to look at how values have changed over the past few years to illustrate just how important it is to have the value of your collection updated regularly. We think you will be shocked by the results!


David Hockney (British, 1937)
Pool Made with Paper and Blue Ink for Book, 1988
Lithograph, edition of 1,000
26.5cm x 22.5cm

2015 – £10,000

Now – £25,000


Yayoi Kusama (Japanese, 1929)
KOKORO (Heart), 1988
Acrylic on canvas
65cm x 53cm

2006 – £45,000

Now – £225,000


Andy Warhol (American, 1928-1987)
Marilyn (no. 31)
Screen-print, edition of 250
91.4cm x 91.4cm

2015 – £175,000

Now – £300,000


Banksy (British, 1974)
Girl with Balloon, 2003
Spray-paint and stencil on canvas, edition of 25
40.5cm x 40.5cm

2015 – £175,000

Now – £600,000


To speak to us about an art valuation call us on 01883 722736 or email [email protected]