The provision of professional certified valuation documents is a core element of our business. We specialise in creating valuations of art, antiques and jewellery for a number of purposes, including:
- Inheritance Tax (probate)
- Capital Gains Tax
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Lyon & Turnbull work closely with an increasing number of UK based professional advisors, including lawyers, accountants, insurers, private bankers, art advisors, estate managers and many others.
We regularly speak to our clients, both private and professional, to review the services we offer; taking into account legal and regulatory changes, information technology developments or other circumstances which may affect requirements. As a result we are able to respond quickly to our clients’ needs on an informed and experienced basis, and are consistently rated as amongst the best valuation providers by industry professionals.
Recognising that clients often have exacting schedules and may be operating under difficult circumstances, we provide a quick and efficient service, competitive in both cost and speed of delivery.
Our service: reliable, discreet and knowledgeable
Each member of our specialist valuations team has years of experience providing fair market valuations. They work in partnership with our various specialist departments to ensure that the knowledge and expertise applied to each valuation is of the highest standard.
To find out more or if we can be of assistance, please contact our Valuations Team.
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No 1 | AUGUST 2016
The 2015 Insurance Act: Good faith and accuracy of material information | Implications of contents underinsurance | John Sibbald, Consultant, Lyon & Turnbull
The Insurance Act 2015, which is the result of a joint review by the Law Commission and Scottish Law Commission into insurance law, comes into force this month. Together with the 2013 consumer insurance reforms, the new Act represents the greatest change to insurance contract law in this country in over 100 years. It will amend certain key sections of The Marine Insurance Act 1906, although it is worth noting that this Act has not been repealed.
Although the changes introduced into the new Act will apply to business (i.e. non consumer) insurance, it is a timely reminder of some of the implications of The Consumer Insurance Act 2012 which came into force on 6 April 2013 and which deals with insurance for home, car, pet, travel, life, critical illness and income protection insurance, health insurance and pension annuities. As with the 2015 Act, good faith and accuracy of material information also play an important role.
The Consumer Insurance Act 2012
The 2012 Act gave customers more clarity on what information they need to disclose to their insurer when taking out insurance. It created an obligation on the part of the insurer to ask specific questions to obtain relevant information about the circumstances relating to the purchase of insurance. The Act gives legal protection if the purchaser unknowingly gave incorrect or incomplete information to the insurer. The insurer would not be able to decline a claim on the grounds of non-disclosure unless the purchaser carelessly or deliberately lied or misrepresented his circumstances.
The Act generally expects the purchaser to take reasonable care to avoid misrepresenting his circumstances when answering questions posed by the insurer. This means ensuring that information given to the insurer is not knowingly untrue or misleading. The Act also applies to insurance renewals made after 6 April 2013.
The purchaser has a duty to check the renewal notice and notify the insurer if the information held about his circumstances has changed or is incorrect. Some renewal notices, of course, often specifically ask customers to check that specific important information is correct.
We set out below the results of a recent examination into levels of underinsurance which suggest some serious implications as to how the purchasers of contents insurance interpret their duty to keep the broker or insurer informed of important information relating to value. These results do not, of course, reveal the extent to which underinsurance is result of a deliberate decision by the policy holder (for example to avoid increased premiums) and which may then fall into the “knowingly untrue or misleading” category, but it is not unreasonable to assume that at least some of it is decision based.
Meeting the requirements of the 2015 Act
There is also an implied challenge to the broker or insurer when insuring their own businesses under the 2015 Act in terms of the new ‘Reasonable Search’. This obliges the insurer or broker to make adequate enquiries within their business to identify and verify information relevant to the risks concerned. If their business tolerates inadequate information about the value of items they insure, it is hard to see how they can meet this requirement. (It is not uncommon to find valuations for current policies that are ten years older or more.)
Awareness of underinsurance by clients must also surely count as a “known area of concern” where there is now a requirement under the 2015 Act for this to be highlighted. Where circumstances merit, insisting on annual valuations where there are known market fluctuations (for example, jewellery or Asian works of art) or, at the very least, tri-annual may be a way forward.
The problem of underestimation
The problem of policy holders underestimating the value of their contents has increasingly been viewed as a matter of growing concern. The disparity between the insured value and the real value can often be very high particularly with regard to jewellery where prices have been rising in recent years. According to the Association of British Insurers, research showed that one in five households could be underinsured because they did not know how much their home contents were worth. In 2011, Direct Line was estimating that some 6.8 million British households were then underinsured, with £200bn of home contents at risk in total. (Telegraph, 16 Jan 2011).
A recent analysis of a sample of valuations, revealed high levels of underinsurance, particularly in the categories of fine art and jewellery (valuables) and would appear to support the above findings.
No less than 30% of clients who had instructed a Walk Through Validation (WTV) were found to require a full valuation if they were to provide the required accurate basis for their insurance cover. (The WTV is provided to the Mid Net Worth client and consists of a room by room contents appraisal by category, providing global figures and comments). In the majority of these instances, amounting to as much as 82%, the problem was found to lie with failures to keep up with rising jewellery values. Of the other 70% of WTVs 67% were found to be underinsured to some extent or another.
Rising jewellery values
The 2015 October issue of the Financial Ombudsman Service’s News reported an instance where the insurer voided the policy for underinsurance. The customer was only insured for up to £25,000. Following a break-in when all her jewellery was taken, the loss adjuster found that replacing all the lost items would cost over a £120,000. The same issue reported another case which involved the changing value of gold jewellery where £8,500 was claimed for a lost gold bracelet appearing on the current insurance schedule still at its original valuation some years earlier at £4,500. The insurer declined to pay the full £8,500 on the grounds that they had made clear to the customer that it was his responsibility for keeping the valuation of the bracelet up to date and that there might be consequences to under-insuring his possessions. At the higher end of the market, certain categories of jewellery, such as coloured stones, have seen huge increases in price in recent years. Last year, according to the new Fancy Colour Diamonds Index, coloured stones have risen in value by 165% since January 2005.
But it is not just rising values, but also the growing demand for jewellery that may be affecting insurance valuations. Hammerson’s Retail Tracker has shown a 3.5% rise in jewellery sales for the first half of this year (with a 2.4% rise in June alone) continuing a reported surge last year for expensive handbags and jewellery which quoted retailers including Boodles, Harrods and Bentley & Skinner as reporting an increased demand from women buying jewellery in the £1,500 to £2,000 bracket.
Underinsurance at the higher levels
Looking at all valuations, both full and WTV, the highest level of underinsurance, by both client numbers and values, was at the £400k band, although at that level the actual average percentage of underinsurance represented 23% of insured value. By contrast, at £250k, the percentage of value underinsured rose to as much as 39.92%. A substantially significant number of clients in the sample were required to revalue within the bands up to the £200k level, accounting in the sample for a difference of some £2.6m between the current and recommended valuations.
In some cases, it was found necessary to recommend significant increases in valuation, as in the following examples:
We appreciate that the average premium is below £300 for the 20.4m UK homes with contents insurance (ABI UK Insurance Key Facts 2015). However, it is, of course, at these levels that a huge amount of insurance cover is being provided. We are aware too that there is often a focus on value discrepancies at the higher end of the market rather than at the lower, but there is always the possibility that this may lead to an incomplete assessment of overall risk.
If translated into the context of the industry as a whole, the above findings may raise some serious issues around the accuracy of information being used to achieve a “fair presentation of risk” by brokers and insurers as required by the 2015 Act. Underinsurance on an industrial scale should, perhaps, also be prompting the insurer too look again at how he meets his obligation under the 2012 Act when asking specific questions to obtain relevant information from the purchaser of insurance.
While many insurance companies have been continuously improving their proposal forms to make it easier and clearer for their non-business customers, unlike the 2015 Act, the obligation remains with the customer to supply correct and up-to-date information. Brokers and insurers may have to do much more through customer education to ensure that they are operating with up-to-date information to identify more accurately the risks to businesses under the ‘Reasonable Search’ to achieve the ‘fair presentation of risk’ required by the 2015 Act.
ISSUE 3 | MAY 2016
Scottish Taxation and Scottish Taxpayers – The Next Instalment | Alexander Garden, Partner, Turcan Connell
Since June last year there have been two further significant developments in relation to taxation controlled by Holyrood or affecting Scottish taxpayers. Alexander Garden examines where we are now and the likely further direction of travel.
From Egypt to Glasgow: Holding and Contributing to Public Art | Alan Eccles, Partner, Brodies LLP
The Burrell Act raises wider points that are emphasized by the Northampton sale of the statue of Sekhemda, which are important for those wishing to donate art to the public as well as those running and leading public museums and galleries. Whatever legal mechanism is used for the philanthropic action, it should be made clear how any modifications can be made, and by whom.
Gift of Chattels – The Tax Implications | Peter Young, Partner, Johnston Carmichael
There are a number of issues and pitfalls to be aware of when making gifts of chattels during your lifetime which can undermine the tax efficiency of such gifts, particularly should you gift an asset during your lifetime, but retain possession or use of the item.
Updates, News & Comments
A series of updates including news from the Birmingham Assay Office, CITES update, Hiscox Online Report, an Art Inheritance Tax update and much more
Valuations News | Issue 3 | May 2016
ISSUE 2 | JUNE 2015
Tax and National Heritage | Selling Off the Family Silver: The Advantages of Sale by Private Treaty | Moira McMillan | June 2015
What choices will be faced if the owner is in the position of wishing to sell heritage assets to raise money? If the money is not required to fund a tax charge, a Private Treaty sale to approved government bodies such as museums and galleries is an option which could leave the owner with a better net cash result than a “normal” sale at auction.
Potential Pitfalls of Giving | Lianne Lodge | June 2015
Making gifts can be a useful strategy as part of tax planning. However, there can be pitfalls for the unwary. The author sets out what some of these are, reminding would be donors of the need for professional legal, tax and valuation advice.
Scottish Devolved Taxation: where are we now? | Alexander Garden & David Welsh | June 2015
This article examines the changes being brought about in relation to income tax by the 2012 Act and, in particular, to review the way in which these provisions might act as a foundation for future devolution of taxation powers to the Scottish Parliament, especially in light of the Smith Commission’s suggestions on the matter.
The Changing Landscape of UK Wealth - The move to alternative asset classes | John Sibbald | June 2015
Wealth in the UK is now not only more international, more diverse and more driven by entrepreneurship rather than inheritance, but the move by the wealthy into art, antiques, jewellery, wine and other collectibles as alternative asset classes has brought an increased requirement for ancillary services.
Valuations Newsletter | Issue 2 | June 2015
ISSUE 1 | MARCH 2014
Scottish Revenue | Bill Pagan | March 2014
HMRC, directed by the Chancellor and the Treasury, has for some years been saying that tax avoidance is pretty well the same as tax evasion - in other words much “Tax Planning” is unacceptable. There is now a General Anti Abuse Rule (GAAR) for most UK taxes. Scotland has been given responsibility for some taxes of its own. So what is the Scottish Government’s approach? What powers does it plan to give to the Scottish equivalent of HMRC – “Revenue Scotland”? In addition to administrative essentials, substantive Anti-Avoidance powers will be granted to it.
Statutory Residence – A New Regime in the UK | Patricia Mock | March 2014
The new statutory residence test offers a great deal more certainty to internationally mobile individuals who need to determine their residence status. However, there are a large number of thresholds to consider and the more ties an individual has, the fewer days of UK presence are allowed before being treated as resident. Careful consideration of the rules is likely to be vital in very case.
Chinese Walls & Chinese Vases | John Sibbald | March 2014
In the current fiscal climate, accurate and up-to-date chattel asset valuations have never been more important. Not only will they help to ensure sound tax planning, but with HMRC’s increasing focus on perceived tax evasion through chattel under valuation and misuse of the Nil Rate Band, they may also help avoid costly and time consuming investigations.
Unoccupied Property Insurance | Ian Burrell | March 2014
Lyon & Turnbull has arranged an affordable solution to this recurring problem that provides an all risks cover for buildings, contents and valuables. Operated by Berkeley Heritage Insurance, a team of trained insurance professionals will guide you through the process quickly – “Best – by far – for customer service” – Karen Wilson, Property Manager, Drummond Miller, solicitors - Edinburgh.
Hamilton Palace - Power House - Treasure House | Godfrey Evans | March 2014
National Museums Scotland has always been interested in acquiring works from Scotland’s largest and greatest powerhouse and treasure house. Since the great sales of the contents in 1882-84 and 1919, many Hamilton items have entered the national collection in Edinburgh, and the flow has steadily increased over the last forty years. With the encouragement of the National Museums and the Virtual Hamilton Palace Trust a number of research projects are currently focussing on archival research on the collections. Interest can only increase with the announcement that the Trustees of National Museums Scotland have now agreed to mount a large-scale exhibition on the Dukes of Hamilton and Hamilton Palace.