You’re probably familiar with your auto and homeowner’s insurance policies, but what about insurance for your business? Not only can these policies be more complicated, but the stakes are also higher: Overlook a detail in the fine print, and your claim in the event of theft or other kind of loss might be denied.
As a business owner, you already know you need liability and business interruption insurance coverage, plus a general business policy that covers your store, display cases, furniture, computers, and so forth. Notice what’s missing from that list? The jewelry itself.
“The problem with a business owner policy is that there is a very limited amount of coverage for jewelry that is above a certain price limit like $50 or $100. It may only give you $2,500 coverage,” says Bob Carroll, owner of Robert G. Carroll & Associates, an independent insurance agency in Oklahoma City. “Where it fits is if you’re strictly fashion jewelry or something like that, but if you’re dealing in fine jewelry and gemstones, that’s not going to work.”
To fill in this gap, most insurance experts doing business in the jewelry industry recommend something called a jewelers block policy. Available from specialty insurance companies and brokers, these policies are tailor-made for the jewelry industry and address all the specifics that wouldn’t apply to a business owner selling speakers or sweatshirts.
Get a policy that covers you beyond the walls of your store.
“A jewelers block policy provides coverage for precious metals, gems, and stones,” says Patricia Low, president and CEO at Jewelers unBLOCKed. “It covers stock along with coverage for salesmen, transit, customers’ goods, and goods on memo,” she says. “We’re protecting the physical asset.”
Ideally, they should also should cover travel and trade show exhibition, which aren’t the same thing, cautions David Sexton, vice president of loss prevention at Jewelers Mutual Insurance Co. in Neenah, Wis.
Consider adding coverage for different types of shipping options.
Sexton says jewelers who do online or mail-order business or who move their inventory around frequently can elect to obtain extra shipping coverage, including armored car or courier transportation. Retailers who accept a lot of pieces on memo, host trunk shows, or loan out their pieces to be worn for events such as awards ceremonies or fashion shoots need to work with their agent to make sure coverage for those special situations is included.
Determine the limits of the insurance you want to carry.
“Typically, what we see is that most jewelers attempt to insure their current replace cost at 80 to 100 percent,” Low says, adding that determining the level of coverage involves considering a few factors: Is the piece in a higher-exposure location like a window or is it vulnerable to theft during travel? Is the item a likely target for theft, or would thieves tend to go after other jewelry?
Do an apples-to-apples comparison.
Carroll says it’s smart to put your jewelers block and general business policies side-by-side and compare what each covers to avoid overlap (and overpaying). “I’d suggest getting your non-jewelry stock under the business owner’s policy,” he says. After all, if someone’s going to steal from you, they’re far more likely to take a diamond ring than the office chair in the back office.
Different policies have different valuation clauses.
You could insure an item for the dollar value you paid for it, but most agents don’t recommend this. Given the fluctuating prices of precious metals and gems, and the escalating cost of gold, in particular, this could leave you coming up short. A better way to determine value is by looking at the replacement cost: What would it cost you to get a lost, stolen, or damaged item back in your display case?
Mitigate your risk by setting up security equipment and protocols.
“A jewelers block policy is warranted. The insured makes certain promises they will live up to in exchange for coverage consideration,” Sexton says. “There are certain conditions the jeweler must agree to, such as maintaining a described alarm system for the life of the policy.”
A version of this story originally appeared in the November 2014 issue of JCK magazine.
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