HNW homes at risk from underinsured wardrobes

High net worth (HNW) insurers have raised concerns over a growing protection gap in designer fashion collections, with the underinsurance of handbags, clothing and footwear becoming a more material concern as claims complexity increases.

According to Tim Lewis, underwriting manager at Hiscox, the insurer had long included high-end handbags and clothing within the general contents of its HNW policies – but has seen a growing need for specialist valuations due to the evolving nature of customer portfolios and inflationary pressures.

Lewis explained: “We’ve been doing this for 35 years and it just comes hand in hand with being an affluent customer.

“They’ve got really nice handbags, really nice clothing – not Marks and Spencer shirts. You scale up to high-end clients and they’ll have tens of thousands of pounds worth of handbags – and multiple of them.“

Despite being aware of the expensive nature of their possessions, many HNW individuals may underestimate the value of their possessions, especially for items like clothes or handbags that fluctuate in value.

Rising inflation and price fluctuations have contributed to the challenge of keeping insurance coverage up to date for HNW collections, according to an Ecclesiastical report from 2023.

Lewis added that underinsurance had become an increasing concern – particularly as many clients underestimated how much their luxury items had increased in value by.

He explained: “I bought my wife’s handbag for £500 five years ago and it’s now worth £845. If you scale that up to a Hermès Birkin, that 70% [is a lot more].

“People might think items are still worth what they paid. In reality, it’s a lot more today.“

For example, a Hermès Birkin 25 bag made with togo leather was sold for around £7,000 in 2016, with the average price rising to £9,400 in 2025. This is not accounting for limited edition variants or auction resale values, which can see prices increased far and above those seen for standard models from the original retailer. 

Sara Bailey, head of private clients at Woodgate and Clark, echoed Lewis’ point, explaining that claims related to fashion collections could become particularly challenging to deal with without detailed documentation or proper valuations.

She said: “Without recent receipts or photographic evidence, it can lead to delays and partial settlements.

“In some cases, like designer fashion, trends don’t follow a typical depreciation curve – some items gain value over time. Insurer valuation models need to keep pace with the current, fluctuating prices of luxury.”

Social media and visibility risks

Sue Coffey, personal lines director at Covéa Insurance, warned that designer handbag theft had become increasingly targeted, as highlighted by London’s Metropolitan Police, and was the owner’s responsibility to be aware of.

She said: “We are aware that the Met Police has shared stats about the targeting of designer handbags for theft.

“While our claims experience doesn’t indicate a specific increase in theft of designer clothes and handbags, with safes often hidden in dressing rooms and wardrobes, this does present easy opportunities for intruders to steal them.”

Lewis agreed, adding that criminals increasingly use digital tools to scope out high-value homes and items.

He said: “We like to ensure people are a bit more conservative with their social media presence. Being active on social media presents a unique challenge. While it’s great to share your lifestyle with friends and family, if your settings are open and public, you don’t know who might be looking at it or tracking your movements.”

While none of the three HNW experts reported a sharp rise in claims resulting from thefts specifically targeting fashion items, some noted that such claims had become more complex due to supply chain issues and exclusivity.

Bailey highlighted: “This is down to the complexities of valuation, fluctuating resale values and underinsurance risks.”

Lewis added: “Some bags – like Birkins – are incredibly rare. There might be a year-long waiting list. So, instead [of replacing the item], we often have to settle in cash.”

Valuations were highlighted as particularly crucial when fashion items were bought second-hand or through resale platforms.

Bailey concluded: “Revaluation should take place every one to two years, or upon major fashion market shifts.”