Insure Your Diamonds for Full Value Warns Marsh

August 25, 2008

Marsh is warning jewellery collectors of the risk of underinsurance in the wake of spiralling diamond and precious metal prices. The broker issued a bulletin from its London office, which notes that “over the past 12 months, the price of large diamonds has increased by an average of 30 percent while platinum has almost doubled, far outstripping general price inflation.”

Sara Dunn, Client Executive in Private Client Services at Marsh, explained: “It is the responsibility of the policyholder, not the insurer, to ensure that their sums insured adequately represent the cost of replacing items. If they do not, in the event of a claim, they will receive no more than the sum insured or the single article limit, leaving them out of pocket.

“Generally, insurers will apply index linking to insurance policies based on the General Index of Retail Prices, rather than an index which specifically tracks changes in the cost of jewellery,” she added. “While the sum insured for specified items will increase in line with inflation, it does not necessarily mean that it will keep pace with increases in the jewellery market. Unspecified jewellery cover is also subject to index linking by insurers. Unspecified jewellery cover always contains a single article limit which can be easily exceeded if valuations are out of date.”

Dunn also recognized that “jewellery often has a sentimental value and as such is irreplaceable. But, by having it revalued on a regular basis, insureds have the comfort of knowing that they will be compensated for its full value should the worst happen.”

Marsh recommends that items of jewellery are revalued every three to five years. However, if any items are increasing rapidly in value, such as large diamonds, insureds should consult an expert jewellery valuer, who will be able to advise them on the frequency these pieces should be reappraised.

Source: Marsh – or

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