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Greg Beaumont: Insurance companies are not the bad guys
Greg Beaumont: Insurance companies are not the bad guys

Insurers are not jewellers

The Great Insurance Debate continues with some jewellery retailers feeling “cheated” but GREG BEAUMONT says the insurance industry needs to be educated about the jewellery industry ... and vice versa. Sure, but is there really a problem?

Insurance companies are not jewellers – they do not understand the industry and have little or no understanding of the value of the individual attributes that make up jewellery items. Given that, it is easy to see why they would be confused when a jeweller offers 30 percent off the ticket price when quoting on an insurance claim but then offers 50 percent off to customers.

Insurers offer two basic coverage types: home contents and specified items. Coverage for items in home contents is usually in the range from $1,000 to $1,500 per item to a value limit of between $4,000 and $6,000. 

Policyholders need to be aware that the coverage will not exceed the policy’s value limit – if the value limit is $4,000 and 10 items are lost, totalling $15,000, the payout is still capped at $4,000.

Home contents claims make up more than 90 per cent of all insurance claims and most policyholders do not have specified item coverage. Even if policyholders have specified items insured, they will need to be able to prove ownership and have a detailed description and current value of the item or the claim may be reduced or refused.

For example, if the valuation states “18-carat gold diamond ring”, a description I have actually seen, then that is what has been insured. If the policyholder insures an “18-carat yellow-gold handmade ring weighing 5.5 grams, with 1 x 0.75-carat, round, G/VSI diamond claw-set”, then that is what is insured.

Because insurers know very little or nothing about jewellery, they form relationships with certain jewellers, relying on their advice and expertise. In turn, those jewellers become preferred suppliers.

When a home contents claim is made, some insurers will use a jewellery claim validation service to determine the value of what has been lost. Other insurers will simply tell the claimant to go to the insurer’s preferred supplier for a quote. If the client wants to use their own jeweller, the insurer will agree, so long as the preferred jeweller also quotes.

When a non-preferred jeweller quotes, the usual practice is for the insurer to black out the amount quoted and send the item descriptions to their preferred suppliers for them to quote. The preferred supplier will ask the claimant, or the insurer, the value of the policy.

This is an important part of any quote – imagine a client enters your store  and requests a quote for 15 items worth a total of $15,000 under their home and contents. You may quote to supply these items for $12,000. The preferred supplier will know that the customer’s total coverage is, say, $5,000 and offer to supply the items for $4,000. The insurer now has two quotes, one for $12,000 and one for $4,000.

Insurers are not the bad guys here – they provide a contents coverage limited by “per item” and “collective value” amounts and have no record of what is insured prior to loss. If the client has a valuation that says that an item is worth $10,000, then an insurance company will provide coverage for $10,000, unless they find out that the cost to replace is less than this. They then pay the cost associated with returning the claimant to the position they were in prior to the loss – if this only costs them $6,000, so be it.

Insurers need to be educated about the jewellery industry in a number of areas, including make differences, brands, diamond certification and jeweller/client relationships.

Clients need to know exactly what coverage they have, and need to be aware that they must provide proof of ownership, description (including hallmark and original jeweller) and value when specifying an item of jewellery.

Jewellers must also actively inform clients of their insurance requirements, which can be done by providing information on a static document with each sale.

Recording all new jewellery purchases on a system that provides the client with access to their own record will allows the client to produce reports for police when they have a loss. Include “per item” and “collective value” figures of all jewellery not covered under their existing policies, and allow the client to provide proof of ownership, detailed descriptions, detailed photographs and current value to their insurer when a claim is made.

Provide the insurer with a way to contact you, to issue quote request and to receive quotes, all from one central electronic system. All of this will greatly reduce administration costs and claim time for the insurer while, at the same time, eliminating disputes.

Understand your insurance obligations and avoid the pitfalls.

Greg Beaumont is managing director of Jewelsure, a company that specialises in jewellery industry insurance.


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