It is extremely important to have your special jewellery pieces properly insured just in case the worst should happen and you should suffer a loss. Jewelry pieces are often items of high sentimental value making a loss exceptionally painful to bear, especially as the result of a crime. So, the last thing that you would want to happen is to discover you are under-insured and are unable to replace what you have lost at current market prices. As metals and stones prices fluctuate all the time, how do you revalue your jewellery every year for the annual policy renewal, whether for a specialist jewelry insurance policy or for a general household contents policy with a section for insuring jewellery?
The easiest and most accurate way of updating your jewellery valuations is to pay for a professional annual revaluation of your jewellery. However, jewellery valuations do not come cheap, with prices charged typically 1-2% of the overall value of the jewellery. With the rise in jewellery prices as a result of raw material price rises, this method of pricing automatically means that the charges made for valuations have been rising steeply in recent years. Many people don’t want to pay for a professional jewelry valuation every year. So, how do you go about estimating an updated value for your jewelry for insurance policy purposes yourself?
The first thing to do is to talk to your insurance company. It may be that they require you to revalue your jewellery professionally every year. If this is the case, then you have no choice than to obtain a professional valuation annually. However, it will be worth shopping around to see if you can find a jeweller who will make the first initial charge and then charge a nominal amount for the yearly update.
Having talked to your insurance company and found that they do not require a professional annual valuation, you go ahead and decide to make your own estimates. Firstly, get back in touch with the insurance company and ask if they have a rule of thumb for applying percentage changes to jewellery pieces, which you could use. However, even if they do, it is comforting to confirm their number with your own calculations. If you have gold jewellery, then the best way of going about this is to take the price you paid for the item of jewellery, use the internet to find out the percentage movement in the gold price since you bought the item and apply that figure to the price you paid for it. This would also apply to items made in silver. Gold and silver prices are widely available on the internet. Try to use metals prices denominated in your own currency. If you were resident in the UK, but used US$ metals prices then you would not be including the effect of the US$:UK£ exchange rate movements. Ensure that you do not simply apply the price per gram price to your item, as this would significantly underestimate the value of your item, as it would ignore the value of the piece over and above the value of the raw material.
However, what do you do if your piece of jewellery contains diamonds as well as metal, such as a princess-cut solitaire diamond engagement ring? The safest way of insuring your pieces is always via a professional valuation, but if you are absolutely set on going down the ‘do it yourself’ route, then you need to have a reference point which splits out the value of the metal and the value of the diamonds. This would be practically impossible to do yourself as a layman and only a professional jewellery valuer would be able to give you this information. So, your strategy could be either to ask for this information when purchasing the item – but don’t expect lightweight jewellery sales assistants to know this information. You would only get this type of information from a ‘proper’ jeweller with many years of experience in the industry. Alternatively, have one professional jewellery valuation carried out and ask for a split of the valuation into diamonds value and metal value. Once you have your reference point, then search on the internet for ‘diamond prices’ and calculate a percentage movement in diamond prices and a percentage movement in metals prices and apply the values to your piece.
Whether you are revaluing gold jewellery or jewellery set with diamonds, if you find the value of your piece has fallen, then the safest thing would be to keep the value flat or constant for insurance purposes, given that jewellery retailers are generally reluctant to reduce their prices. A small overvaluation of your jewellery for insurance purposes is considerably safer than an undervaluation.