Cost of gold means homeowners might need to review their home insurance
Monday, 15 February 2010 11:11
Home insurers always drop hints this time of year to check your insurance policy but with the price of gold having jumped by 25% in the last year it might be very good advice as myfinance's Kate Saines discovers.
It's around this time of year that insurers like to drop a few hints to remind us to check our home insurance policies.
For starters, it's Valentine's Day - the prime time for buying expensive pieces of jewellery.
And also, according to figures, February is one of the worst months for burglaries as dark evenings and empty homes provide plentiful opportunities for stealing valuables.
But this year there is an added incentive for making sure your contents insurance is up to date and that is down to the rising price of gold.
In the last year it has soared in value by 25%, according to goldprice.org.
So whether you are a desperate romantic who has just received a diamond engagement ring from your beloved, the crime-conscious owner of several pieces of antique jewellery, or a married couple with a gold wedding band which hasn't been valued in years - you are being urged to dig out your policy and give it the once over.
So what if you are a newly-engaged couple or just planning on presenting your loved one with a jewel-encrusted bracelet or pair of cufflinks for Valentine's Day?
All insurers are aware that for those in that situation, thinking about insurance is probably not high on the list of priorities.
But figures released by specialist insurer Hiscox, show the average amount spent by professional couples on engagement and wedding rings in the UK is now more than £2,600.
M&S Money, which provides a home insurance policy through AXA, reckons an average of £1,800 is spent on an engagement ring.
However, both insurers are in agreement that - however unromantic - the first step these couples need to take before purchasing their new treasure is to find out if it's already covered on their home insurance policy.
It is common for retailers to offer specialist insurance to customers buying rings or jewellery. But if you already have a home contents insurance policy, you may well be automatically covered.
You need to find out what the single item limit is for valuables and personal possessions on your contents policy.
If your purchase comes within this limit, it will not worth be paying a specialist insurer for a job your home insurer is already doing.
Many insurers, however, like to be notified if you become the owner of something valuable, so you will need to contact them when you have bought your piece of jewellery.
Hiscox likes customers to let them know about new items in their possession within 60 days of purchase.
Churchill, meanwhile, likes jewellery worth more than £1,500 to be individually listed. Anything worth less is included with the general personal possession total.
And Sheila's Wheels also require anything worth £1,500 or more to be specified on policies. M&S, meanwhile, requires confirmation of items valued at £4,000 plus.
Make sure you keep the receipt or any paperwork showing the item's value. Should you need to make a claim, proof of ownership and value will be needed.
Many insurance firms like policyholders to take a close-up picture of their precious item as well.
This advice is also extended to those people already in possession of expensive or valuable pieces. And people are also being urged to dust off their policies and take a look at the limits on their personal possessions cover.
This is because, while you may think your great grandmother's antique gold locket is safely insured, if you haven't had it valued in the last few years it could have risen in price. And if it has increased in value, you could be underinsured.
David Wells, head of insurance at M&S, explained: "Many contents insurance policies have specific limits on single items, so if you think an item of jewellery may be worth more now than when it was bought, it would be worth having it re-valued to ensure it is going to be covered by your existing policy."
Most insurers will require you get valuable items over a certain amount valued regularly. Some ask this is done every two to three years.
However, with the price of gold and platinum rising at astonishing rates in the last year alone it might be worth getting valuations done more frequently and informing your insurer.
Hiscox cited the case of a leading jeweller who knew a couple who had bought an engagement ring for £222,000 and discovered, two years later, it was worth £600,000.
Simon Goddard, household insurance expert for Hiscox, said: "One in six couples admit they have no idea how much their rings are currently worth, which means they could be underinsured and at risk should they ever need to make a claim."
Once your items have been valued, the advice from insurers is to leave a copy of the valuation with a bank, solicitor or insurance broker.
But while many items can become more valuable with time, it's not just rising prices which can contribute to the value of your jewellery creeping up unnoticed.
Simply adding a new trinket to a charm bracelet can hike the value of an item. If you buy an expensive piece to add to an item such as this, it's worth notifying your insurer as well.
Anyone who does decide to follow the insurers' advice and give their insurance policy a glance to check they have adequate cover should also make sure they are covered both inside and outside the home.
This is especially important if you wear your jewellery regularly - which is highly likely in the case of an engagement or wedding ring.
Cover outside the home might not come as standard, so make sure you ask your insurer to provide this additional feature should you need it.
And it's also important to check your jewellery regularly to make sure every piece is insured.
Data from insurer Sheila's Wheels shows many women are underestimating the contents of their jewellery boxes as items build up over the years and forgotten jewels become more valuable.
Jacky Brown, at Sheila's Wheels, said: "All women should ensure that their home contents insurance policy accurately reflects the amount of jewellery they own and that they have adequate personal possession cover in case disaster strikes."
While having insurance provides peace of mind and the security of knowing the cash value of a stolen or damaged item can be returned, nothing can make up for the emotional loss of an heirloom or special gift from a loved one.
For this reason the insurers urge their home insurance customers to take care of their pieces. It might sound obvious, but ensuring jewels are hidden out of view of windows and tucked away safely can reduce the chances of them being stolen.
What's more, many women - according to Sheila's Wheels - can walk around for weeks wearing engagement rings which are too loose.
Something as simple as getting your ring adjusted to the right size before showing it off in public can reduce the chances of it being lost.
Meanwhile, Churchill Insurance has even published a list its quirkiest excuses for the loss of a ring. Reasons included a child flushing the ring down the toilet, the dog swallowing the piece of jewellery and one person lost theirs whilst at a wedding.
So, if the thought of losing your precious ring down the loo fills you with dread, then maybe it is time to get that personal possession cover in place.
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