Jewellery insurance cover 'risks being undervalued'

Inspection of jewellery The price of gold has surged in the last year

Six million UK households could be underinsured owing to the rising value of precious metals and gems, according to the industry.

Silver is now worth about nine times more than it was 10 years ago, and the price of gold has risen by 50% in the last year alone.

The proportion of insurance claims involving jewellery has increased because of targeting by thieves.

Some claimants are missing out on full payouts because values are out of date.

Rising price

Philip Diaper, manager of London's oldest pawnbroker, Suttons & Robertsons, has been in the trade for 25 years.

"The price of gold has just run away. A common garden gate bracelet ten years ago would have melted for £65; today it is worth £350," he said.

The rising values have not escaped the notice of criminals.

Tips for insuring jewellery

  • Tell your insurer or broker of any new acquisitions, or if any item's valuation exceeds the single item limit on your home contents insurance policy
  • Get a professional valuation that reflects current market trends
  • Take photos of each valuable item
  • Keep a copy of your professional valuation with your broker, bank or solicitor for safekeeping
  • Take jewellery to be professional cleaned and checked
  • Keep items not being worn in a suitable safe

Jewellery now accounts for a third of all theft claims to Churchill Home Insurance, not all of which are successful.

Ian Davies, head of underwriting at the insurer, said that around 40% of those claiming for jewellery and gold losses were underinsured.

"This is obviously a large proportion of customers and the amount they are underinsured by can be up to three or four times the value that the claimant originally thought the item was worth," he said.

Cover

If an insurer realises that a policyholder is underinsured, it can only pay the original valuation if a claim is made.

And if an insurer suspects a claimant of deliberately underestimating the value of their contents, it can refuse to pay the claimant entirely.

Insurers can use a clause called "condition of average" to settle claims, explained a spokesman for Moneysupermarket.com.

That meant the insurer would use the original valuation rather than the amount the items were now worth to work out how much to pay the claimant - even if the total claim was under the threshold set in the policy, he said.

Jonathan Lambert Jonathan Lambert says people should have items revalued regularly

In addition, payouts for items listed separately in insurance documents might only reach the threshold originally set out on the policy - even if the items were now worth more than this.

Updating values

High street jewellers can send items to a member of the Institute of Registered Valuers for revaluation. Fees vary based on the value of the item and the time taken to assess each piece.

"It is vitally important that you have your jewellery revalued on a regular basis for insurance purposes," said Jonathan Lambert, chairman of the Institute of Registered Valuers.

"If you go to a reputable jeweller they will explain the scale of charges first and really you should not be put off by the cost of having it valued because it is minute compared to the cost of being underinsured should you suffer a loss."

Malcolm Tarling, spokesman for the Association of British Insurers, said: "It is important that people's contents cover reflects the value of their contents.

"If you are significantly underinsured then this could cause problems should you need to claim. Pay particular attention to valuables like jewellery. It pays to get a professional valuation done as these items cannot be easily replaced."

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