Rising Price of Gold Leaving Jewelry Collections Underinsured

Many affluent consumers lack adequate insurance coverage for their jewelry because they haven’t considered the impact of the decade-long rise in the prices of gold, platinum, and silver.

That’s according to insurer ACE Private Risk Services.

“If you scheduled a 24-karat gold bracelet on your insurance policy for $3,000 ten years ago, it could be worth over $12,000 now, since the price of gold has quadrupled over that period,” said Robert Courtemanche, chief executive officer, ACE Private Risk Services. “Multiply that one piece many times for high net worth consumers, who often have extensive jewelry collections, and you could be talking about an insurance gap approaching or exceeding six figures if they haven’t updated coverage.”

The issues are addressed in a white paper from ACE Private Risk Services titled, “Does Your Valuables Coverage Meet the Gold Standard?”

The white paper contends many affluent consumers have not realized how much their jewelry and precious metals items have appreciated, so they haven’t adjusted their insurance coverage to reflect these higher values.

“Historically, we have seen clients underinsured by 40 to 60 percent across all categories of valuable articles, including jewelry,” said Gerald Escobar, principal of Asset Archives, a global appraisal firm based in Atlanta, Ga.

Similarly, an insurance organization survey of those owning a valuables collection – such as gold jewelry, fine art, or antiques – found that 47 percent did not have special insurance coverage for their collections.

“Affluent consumers should also consider the semi-precious jewelry they haven’t scheduled,” added Courtemanche. “These items may have appreciated to the point where their aggregate value exceeds the coverage limits for jewelry in their homeowners policies.” In such cases, blanket coverage offered by valuables policies geared to affluent clients may be the best solution. Blanket coverage allows a collection of similar items of moderate value to be covered as a whole, eliminating the tedium of scheduling each item individually.

The insurer recommends three steps that affluent consumers can take to protect their jewelry and other precious metals items:

1. Update inventory. A current inventory is not only critical when losses occur, or when a major move is planned, it is imperative if it’s been several years since gold necklaces, watches, and other precious metal items have been appraised.
2. Review and adjust existing policy. Compare the values in an updated inventory with the coverage limits in the existing homeowners and valuables policies. Homeowners policies have special limits on the amounts they will pay for jewelry and other collectible items. Purchasing additional protection through a valuables policy on an individual (scheduled) or blanket basis is often necessary.
3. Repeat steps 1 and 2 as part of an annual insurance review. The best and easiest way to keep valuables well protected, is to partner with an insurance agent for a once-a-year review of all insurance needs.

The white paper also discusses different kinds of valuables insurance coverages, as well as tips for managing the cost of coverage for jewelry.

ACE Private Risk Services offers the ACE Platinum Portfolio, an insurance program designed to meet the needs of affluent and high net worth individuals and families.