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  • Jason McClean
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ZOOPLA has revealed the top 10 most expensive streets in Britain and it got me thinking about the relationship between property price and Home Insurance.

Take Kensington Palace Gardens in London, the most expensive street in Britain. The average house costs more than £38million. It is not nicknamed Billionaires Boulevard for no reason.

The Boltons in London isn’t much cheaper at £33million per property on average.

Now, some of these properties literally are palaces. Huge, opulent properties in the middle of the city. At these sorts of values they are not governed by the normal rules of property insurance. Instead, they will come under the umbrella of a High Net Worth product that is likely to encompass everything from property to life insurance, vehicles, artwork and jewellery amongst other items.

The cost of High Net Worth Insurance is usually high because of the sums involved and will be brokered on a case by case basis. Premiums in the tens of thousands of pounds are not uncommon.

But there is one element that always remains the same. The relationship between property price and Home Insurance. The retail value of the property, even at £38million, is very unlikely to be the same amount that you need to insure. It wouldn’t surprise me if the rebuild value was less than £10million.

You see the cost to rebuild a property can be considerably less than the retail value. It simply includes the price to rebuild and doesn’t take into account the location. The location alone in Kensington Palace Gardens is worth possibly £10-£20million! But you can’t insure against that going up or down in value. You can only insure against the cost of the rebuild of the property.

Property value and home insurance are not the same thing

And that rule applies on more normal priced property. My own house I have lived in for 13 years is now worth around £300,000 if I was to sell it, although Mrs McClean would not permit that. But the rebuild value is actually around £170,000.

The good news is that you only pay to insure the rebuild value, so the lower that number, the less you will pay in insurance. There is less risk to the insurer and a smaller amount to cover if you ever need your insurance.

So don’t make the mistake of thinking the sale price of your house is the same as the rebuild value for Home Insurance. And also consider in times of falling house prices, the same can happen in reverse. The retail value of your property may be less than the rebuild value.

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Jason McClean


High net worth insurance

Property prices and Home Insurance

I am a director of the Property Insurer and Property Landlord. We tell it how it really is. Yes property insurance can be boring , but our job is to make it more interesting, useful and above all save you money!