A jewelers block insurance policy covers you in the event of a business catastrophe—provided you’ve read, and abided by, the fine print
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 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.”
The trouble is that many conventional insurance agents might not even know that the policies they’re selling their retailer clients carry some very serious shortcomings, says Gary Wasserman, vice president of Wexler Insurance Agency in Coral Gables, Fla.
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.
For instance, what happens if a piece is stolen at a trunk show? What if an item you accepted for repair is stolen? How do you value your assets when the price of materials like gold can fluctuate wildly? These are just a few of the considerations a jewelers block policy will address that a generic business policy wouldn’t cover.
In most cases, these policies are separate, although Wasserman says he can package them together in a hybrid policy for clients.
Covering the Goods
“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.”
(photo: Andrei Radzkou/Thinkstock)
To be really effective, that coverage also needs to extend beyond the walls of your store. Ideally, jewelers block policies 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.
“I think sometimes the trade show coverage is a surprise,” Sexton says. Jewelers may think that because they’re insured against loss when they travel with items, that will cover them at trade shows. But that’s not the case, he says. “There’s a special endorsement for trade show coverage.”
Sexton says jewelers who do online or mail-order business or who move their inventory around frequently can elect to obtain coverage for different types of shipping options, 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 like awards ceremonies or fashion shoots need to work with their agent to make sure coverage for those special situations is included. Other risks include losses due to mysterious disappearances, store window smash-and-grab burglaries, and employee theft, as well as breakage due to workmanship. A knowledgeable agent can walk you through all these contingencies and help you create a customized insurance plan for your business.
How Much Coverage You Need
“Make a determination on what limits of insurance you want to carry,” Low says. “You don’t need to insure 100 percent of it. Typically, what we see is most jewelers attempt to insure their current replace cost at 80 to 100 percent.”
Low says 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?
Be aware, however, that under-insuring could affect your premium. “A carrier will typically charge you more money if you’re not insured for full value,” Wasserman says. Although the dollar amount of the premium may be lower because the amount you’re insuring is lower, “as a rate, you’d be charged a higher premium if you’re under-insuring,” he says.
As with your car or homeowner’s insurance, a higher deductible on a jewelers block policy can get policyholders a credit that effectively lowers the rate. Experts say a typical deductible for these policies is $2,500, although deductibles can go as low as $1,000 in some cases.
Here’s another tactic to potentially lower your cost that doesn’t require sacrifice on your part: 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.
How to Determine Values
“Different policies have different valuation clauses,” Low says. 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? Calculating the replacement cost, however, can also be like shooting at a moving target, jewelers block providers say, due to volatility in prices of precious metals and gemstones.
Valuations can be a set amount, for example, 125 percent of the sum you paid for the item, or tagged to commodity prices. It’s not unusual for a carrier to want to revisit your inventory and its value annually. For jewelers who deal in antique or estate pieces or collections, insurers have other formulas for determining how much these items are worth today.
Your Security Responsibility
Because jewelry stores tend to have a higher risk of burglary or robbery than other types of retailers, jewelers block coverage is contingent on your having security equipment and protocols in place to mitigate your risk.
“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 policy also might stipulate that a certain percentage of your items have to be stored in your safe every night. “And just because your safe is big doesn’t mean it’s appropriate for a jewelry store,” Sexton says. Considering that your safe or vault is “your last bastion of protection,” he says your policy might include requirements about the safe’s manufacture and level of security.
The details of each policy differ, so be sure to check the fine print. “Many policies have a requirement that two people need to be present at all times, including when the store is opened and closed—those are your most vulnerable times,” says Peter Montalbano, president of Montalbano Adjustment Services Inc., a loss adjustor and security surveyor in Little Neck, N.Y.
For starters, be sure to make an accurate assessment of your physical and electronic protection. “Many times jewelers think they have alarm systems that are better than they actually are,” Sexton says.
Jewelers’ Security Alliance president John J. Kennedy urges retailers to install alarm systems that have an element of line security. This way, if a thief cuts the line to try disabling the system, the alarm company doing the monitoring will know immediately that there’s been an interference. Of course, being extra cautious never hurts. “Test them regularly,” Kennedy says.
Here’s how to find a specialist who can help put together a jewelers block policy that meets your store’s needs.
Jewelers Mutual Insurance Co.
Jewelers Mutual sells policies through its network of agents. Contact the company to find an agent in your area.
24 Jewelers Park Drive
P.O. Box 468
Neenah, WI 54957-0468
17-17 Route 208
Fair Lawn, NJ 07410
Robert G. Carroll & Associates
1000 N.W. Grand Blvd.
Oklahoma City, OK 73118
Wexler Insurance Agency
1120 Ponce de Leon Blvd.
Coral Gables, FL 33134