Property Casualty 360 - 10/14/2016
By Julie Sherlock
Your clients returned home from the grocery store to find that, in the 45 minutes they had been gone, someone broke into their house.
They hadn't thought to set the alarm for such a short outing. Among the few items taken was their safe.
An entire safe, dragged across the room, thrown down the stairs, and out the door. With it, tens of thousands of dollars in jewelry and other valuable possessions.
As with many of your clients’ possessions, the value of jewelry is not simply monetary. Individual pieces often hold significant sentimental value: a tennis bracelet gifted to mark the birth of a child or an heirloom brooch passed down from a grandmother, for example. These are irreplaceable, so taking the proper steps to secure and protect them is critical.
The following are five considerations to share with clients to protect their possessions:
1. Home Safes are not created equal
Many high-net-worth individuals are opting to store jewelry, especially frequently worn items, in home safes instead of safe deposit boxes. Those sold at big box stores and most locksmith shops are not designed for safeguarding high-value assets. Their flimsy and lighter-weight design make them easy to pry open or carry off.
“Someone with one of these ‘retail safes’ is lulled into a false sense of security. They assume that simply because they have a safe, their valuables are protected,” said Richard Krasilovsky, president and CEO of Empire Safe, which designs safes for the jewelry industry and high-net-worth individuals across the country. Krasilovsky added, “A safe is not a one-model-fits-all solution. The one that is right for an individual depends upon the value they are securing as well as the security of the home.”
Share these tips with your clients to make the selection, purchasing and installation of a safe easier:
2. Careful and timely maintenance prevents loss
Your clients may be very careful about maintaining and protecting their jewelry, but everyone is human: pieces may be unintentionally worn to the beach or loose clasps may go without repair for one day too long. Avoid loss by having a professional inspect pieces, especially higher-valued ones, regularly and at the first sign of damage or defect.
3. Background checks for staff are critical
Recommend that your clients conduct background checks on all domestic employees. All too frequently, thieves know exactly which entrances are not monitored by camera or where a spare key is stored.
4. Don't forgo security while traveling
For clients who travel with high-value jewelry, advise them to hold the hotel room safe to the same standards as they hold their home safe. If they have doubts as to its security, they should ask hotel management to hold the items in the hotel's master safe.
5. Proper insurance coverage is necessary
While the loss of these items can be upsetting, insufficient compensation would be devastating. Your clients may not realize that their homeowners’ policy does not offer enough protection for high-value items. Mass market insurers typically offer only $1,500 of protection, and most insurers that cater to the high-net-worth cap coverage at $5,000. Make sure higher-value items are properly covered on a collections policy.
In addition, maintaining updated expert jewelry appraisals is crucial to proper insurance coverage. An outdated appraisal could mean that your clients are significantly underinsured, so even the 150 percent of value coverage offered by many specialist insurers could easily be insufficient.
High-net-worth insurers typically increase coverage amounts by 5 percent each year in order to account for jewelry value inflation, but this may not always account for the market’s actual movement. For instance, the jewelry inflation was recorded at almost 7% in January 2016.
Appraisals should be updated every 3 to 5 years, at minimum.
No piece of jewelry is ever truly immune to damage or loss. However, attentive care combined with proper insurance coverage, up-to-date appraisals and the right storage solution can help your clients feel confident that they’ve done everything possible to protect their pieces.
Julie Sherlock is a senior vice president, field underwriting officer at PURE Insurance.