Insurance industry warns policyholders to get gold and silver revalued

Saturday, 03 September 2011 11:17

Households and individuals who own precious jewellery, metals and gems are being warned by the industry to check that they have sufficient insurance cover.

The value of gold, silver and other precious metals has risen so dramatically over the last decade that insurance cover that was previously enough to cover the value of any potential loss may not be so now.

According to the insurance industry, up to six million households in the UK could be underinsured. Silver is now worth nine times more than it was a decade ago and the value of gold has never been higher, increasing by fifty per cent in the last year alone to over $1,800 an ounce.

The warning comes as data reveals that jewellery thefts are on the rise and, consequently, the proportion of insurance claims involving jewellery has also increased. However, some claimants are missing out on a full refund through their insurance because they have not upgraded their cover to take account of the rise in value.

A spokesman for Churchill Home Insurance said that a third of all theft claims on home insurance policies involve jewellery and around 40 per cent of the claimants were underinsured, sometimes by up to three or four times.

If an insurer discovers that a policyholder is underinsured, they will only pay the original valuation on receipt of a claim.

Even if the claim is under the limit for the items in question, insurers can use the original valuation rather than the current valuation in settling them. This can happen due to a clause called “condition of average.”

The news means that it is vital for policyholders to have jewellery and gold and silver items re-valued and to ensure that they have sufficient cover to be reimbursed the full value in the event of loss or theft.

Jonathan Lambert, chairman of the Institute of Registered Valuers said: "It is vitally important that you have your jewellery revalued on a regular basis for insurance purposes.

"If you go to a reputable jeweller they will explain the scale of charges first and really you should not be put off by the cost of having it valued because it is minute compared to the cost of being underinsured should you suffer a loss."

Malcolm Tarling, spokesman for the Association of British Insurers, said: "It is important that people's contents cover reflects the value of their contents.

"If you are significantly underinsured then this could cause problems should you need to claim. Pay particular attention to valuables like jewellery. It pays to get a professional valuation done as these items cannot be easily replaced."

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