High-net-worth individuals often underestimate the value of their jewelry collection. Often, people do not think of jewelry as an investment, but view the purchase through an emotional lens. As more pieces are accumulated, the value of the collection can be quite significant. As a collection grows in value, it is important to review how you are safeguarding this asset.
Jewelry as an Asset
Recently, top quality gem stones have been posting record prices at auctions in 2016, according to Forbes. Precious metals and gemstone prices today can result in an owner unknowingly owning over $100,000 worth of jewelry, and often with significant appreciation from what they paid. Many people are surprised that their pieces have appreciated so much and are unprepared for the risks associated with a collection of that size.
Protecting Your Asset in Public
Individuals will wear their best and most expensive pieces at formal events. In today’s age of social media, owners of expensive collections should take great precautions not to publically broadcast the pieces they wear. According to police, posts like these led to the 2016 robbery of $9-$11 million of jewelry from Kim Kardashian in Paris. If it is widely known that you own high valued items, even something as innocent as a social media post acknowledging that you are out of town could put you at risk because it tells burglars that the contents of your home are unattended. To protect against theft, jewelry of high value should never be left out in the open; rather it should be kept in a locked safe or stored in a bank safe deposit box if not worn regularly.
Insuring Against Loss
Generally, homeowner policies have minimal coverages for jewelry built in. Every policy is different, but typically coverage is limited to around $1,500 for loss due to theft. However, $1,500 of coverage is not very significant for more valuable pieces. For highly valued pieces, it is usually better to schedule the item individually on a jewelry floater, also called a rider, as an endorsement to the policy. The insurer usually will want photographs and a recent appraisal of the item in order to accurately determine its worth.
Another option is blanket coverage, which is a policy that provides an overall financial limit with an additional sublimit per individual item. This is convenient for the insured so they do not have to inform the insurer every time they purchase a new piece, but they do have to prove ownership to file a claim so remember to keep good documentation of all purchases. Any item that would individually exceed the sublimit should be insured separately. If you plan on traveling outside of the US with your jewels, make sure that your policy has worldwide coverage and know the limits and restrictions.
Ultimately, jewelry is an asset and it is important to protect that asset, just as you would your house or your car. Best practices can help mitigate any unforeseen perils and insurance can protect you from the unexpected. By putting these precautions in place, you can not only replace the financial value of an item, but protect the sentimental value your jewelry has as well.
