Jewellery owners run the risk of being underinsured

05 July 2011 Alexander Forbes
Gari Dombo, Managing Director, Alexander Forbes Insurance

Gari Dombo, Managing Director, Alexander Forbes Insurance

Consumers who do not have their jewellery regularly valued are in danger of being underinsured.

According to experts, it is more important than ever to have jewellery valuations updated as material costs have skyrocketed. If you can’t prove the value of an item, chances are good that you may be disappointed if you need to claim.

· The appreciation in the value of jewellery depends on two major factors being the diamond market price per carat and the exchange rate (most gold and precious stones are purchased by dealers in dollars.) Over the last decade the price of jewellery has risen by more or less 5% per year.

· Ten years ago the gold price was about $200 dollars per ounce – it currently stands at $1500 with a further 150% predicted over the next five years.

· The price of diamonds has increased about five times in as many months for lack of stock. Three years ago the average price of rough diamonds was $450 per carat and now averages $1450 per carat.

Another reason to have jewellery valued is that it forms part of the evidence chain to help you prove the existence or authenticity of the item insured. “It is particularly important for jewellery received as gifts, or inherited” says Gari Dombo, Managing Director, Alexander Forbes Insurance.

These items may appear to be genuine to you, but might in fact be very good costume pieces. Without a valuation there is no evidence to show the genuineness of the stones or their carat, cut and clarity, or the weight of the gold and its carat from which values can be determined.

Dombo often finds that people who were married many years ago battle to replace their rings and other jewellery in the event of loss because they have failed to update the value of the jewellery they insured in 1975 for example. Certainly, “under these circumstances it would be extremely difficult for their insurer to settle the claim for the correct value” says Dombo.

“Consumers should always be sure to request a valuation certificate” adds Dombo. All jewellers are able to issue buyers with valuation certificates upon purchasing jewellery.

You should ask the jeweller to include the carat, cut and clarity of the stones and the weight or carat of the gold.

Correctly and regularly valuing jewellery is also important in capturing the intangible drivers of value. For example, “a gold band manufactured overseas may have a higher value because of its unique artistry and highly skilled production.” Unless, however, the consumer can prove the artistry, insurers will assume that it can be reproduced by a local manufacturing jeweller without consideration of, or payment for, specialised artistry.

Close up photographs also help to show the detail if an item is lost and has to be remade.

“Insurers will reject a claim for loss due to wear and tear, so stones that fall out may not be covered” warns Dombo.

As such, “when you ask your jeweller to evaluate your collection make sure that all clasps and claws for settings are checked and repaired as necessary” concludes Dombo.

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