If you expect to find some bling under the tree this Christmas, your new year’s resolution might be to ensure you get that treasure insured.
But before you do, you need to be aware of just what that insurance policy covers – and why, should you lose or have your item of jewellery stolen, it may not be possible to replace it on a like-for-like basis.
Given fluctuating prices of precious metals and gems, insurers are increasingly looking at just what jewellery people are insuring with them.
Gold, for example, has rocketed in price by almost 60 per cent so far this year, as has silver, while diamonds have fallen by about 30 per cent in recent years.
RM Block
It means that insurers are looking for more regular valuations.
A spokeswoman for Aviva says that when insuring any diamond jewellery you’ll need the diamond certificate, a detailed professional valuation as well as the purchase receipt.
The insurer also recommends having your jewellery professionally valued every two years. Chubb Insurance suggests you do it every year.
While an accurate valuation may offer you comfort, it doesn’t mean this is what an insurer will always pay out.
Many of us, when we get a new piece of diamond jewellery, will add it to our home insurance policy. For items in excess of about €5,000, this will typically mean adding it as a specified item and paying more for its cover on the overall policy.
This, we expect, is enough to ensure cover to the amount the item is insured for – particularly if we have the item regularly valued – so that we could go out and buy a similar item again, typically from the same jeweller.
However, just because you have a piece of jewellery insured for €20,000 doesn’t mean that, if lost or stolen, the insurer will simply write you a cheque for this amount.
Some insurers might cover the whole replacement cost, but valuer Carol Clarke says that in her experience some may only offer a proportion of the cost – and won’t allow you buy the replacement yourself, but instead will source it for you.
For example, should you lose your Appleby’s diamond ring, which you paid €10,000 for 15 years ago, one would expect that your insurance policy will pay out an updated valuation, of, let’s say, some €15,000 for that ring, which means you can go straight back to Appleby and buy a diamond ring of a similar quality again.
Right? Not so fast.
Firstly, according to a spokeswoman for Aviva, the amount your diamond ring is insured for is an “upper limit” of cover. Aviva will “not pay more than the current cost to replace the item to a comparable specification”.
So, while you might be paying out, say, €200 a year for cover of €20,000 for an engagement ring, this is a misunderstanding on your part (one the insurer has probably addressed in small print). The €20,000 is rather an “upper limit” – as opposed to a fixed amount that you will be reimbursed.
According to Aviva’s policy notes, for example: “If we decide to pay a cash amount to settle the loss or damage, we will not pay more than a contractor appointed by us would have charged for the repair, replacement or reinstatement.”
So then, what happens in practice, is that the insurer will appoint a loss adjuster, who will assist them in the “validation and settlement of jewellery claims”.
But this loss adjuster might source the ring themselves – as Aviva notes in its policy documents, “if a replacement is required then this is generally manufactured specifically for the policyholder and is bespoke to them”.
But what if they want to go back to Appleby for sentimental reasons? Or because they appreciate the craftsmanship a certain jeweller might offer – and which might mean the ring will hold its value or appreciate over the long term?
This is dependent on the insurers allowing you to do so – and they are under no obligation to do so, as per the terms outlined in many of their policies.
A spokesman for FBD, for example, says it has “discretion” to settle the claim through a number of means. Firstly, it can replace the property with the closest possible match where it has been damaged or stolen; or it can pay the customer the amount of the loss or damage “where repair or replacement is not possible”.
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Finally, if it does opt to pay out to the customer – even where replacement or repair is possible – it may not be for the amount that the customer had the item insured for.
“The payment will reflect any discounts FBD might have received had it replaced the property,” the spokesman says.
So then, if the loss adjuster can source your one-carat ring from a cheaper provider, you may end up only getting half of what it will cost to buy new in your preferred jeweller.
It is the “most annoying thing”, says Clarke, adding that the item of jewellery may not be the same as the one you lost or was stolen.
Claims that aren’t settled
Insurers will always try to limit claims where possible.
Clarke gives an example of a woman who lost some of her jewellery and got a post-loss valuation. She talked through the items with the woman and assigned a value of about €8,000 – a valuation that cost the woman €400.
But the insurer wouldn’t pay out in the end, as they had a recorded call of the woman saying in her initial call that she thought she lost them in the house.
While this turned out not to be the case, the insurer wouldn’t pay out on items because of this comment.
“They are listening to every single word you say and how you say it,” says Clarke.
So, check out the fine print and be prepared to pay more for better cover,
A reader’s experience after the loss of a precious ring
Last June, a reader, Peter M, wrote to FBD saying that his wife had lost one of her diamond rings in the sea in Marbella, Spain. He attached a copy of the police report, and the most recent valuation for the ring, from December 2021, of €18,000.
But when the insurer replied, it was to say that this value was “overstated for a ring as described”.
Instead, the insurer offered to supply a similar designed ring, “thereby restoring the policyholder to the same position before the loss”, sourced by the loss adjuster Sedgwick, or a cash settlement of €10,600.
So, our reader went back to the original jeweller, McDowell’s, who gave an updated replacement value of €18,550, based on the 2021 valuation.
FBD subsequently increased the offer to €10,750, but noted to our reader that “retail and cost prices differ hugely” and the valuation he received was a “retail valuation not a cost for remaking the ring”.
FBD has held firm on its offer of a replacement, or the aforementioned cash settlement, but our reader is aggrieved. Accepting a replacement ring, sourced by the insurer’s loss adjuster, is not an adequate settlement he says.
“The ring being replaced will never in my opinion be the same.”
And neither is the cash settlement value.
He complained to FBD that: “Having paid the premium on this ring since 2012 [for the higher replacement value] and having all my wife’s jewellery independently valued, I would have thought that would have been enough, but no.”
When asked for their view, FBD said it would not comment on individual cases.
Our reader is still hoping for a better outcome.
