What does growth in high-value purchases mean for insurance?

What does growth in high-value purchases mean for insurance? | Insurance Business

What does growth in high-value purchases mean for insurance?
The trend for high-value purchases such as fine art and jewelry seems not to have been affected by any economic downturn of recent years – since 2009, the fine jewelry and watch market has continued to grow, thanks in part to e-commerce, while prices in the global art market have continued to break records.

Naturally, when clients pay big money for valuable, and sometimes irreplaceable, purchases, they want to protect both the item and their investment.

Insurance Business caught up with Chubb, which this week launched a new jewelry and fine art digital hub for brokers and agents, to find out what brokers need to know when advising clients.

“As the art and jewelry markets have grown, it’s important to look for a policy that provides a coverage enhancement in the event the market value of an itemized article exceeds the scheduled value immediately before a covered loss,” Laura Doyle, assistant vice president, personal risk services at Chubb, said.

The majority of fine art losses happen when the items are in transit, yet the fine art packing and transit industry is largely unregulated, Doyle said, making it critical for collectors to work with well-vetted professionals.

“Another major source of loss is water damage, especially in condos/co-ops,” she explained. “Collectors should avoid installing artwork below water lines and consider installing water leak detectors.”

Meanwhile, the majority of jewelry-related losses occur due to a ‘mysterious disappearance’ – meaning they are lost or stolen, Doyle said.

“Brokers should look for a policy which provides worldwide, “all-risk” coverage for most causes of loss, with no deductible for their customers,” she explained.

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Jewelry, often sold in pairs or sets – earrings, for example – can be insured as such, meaning that if a client loses a diamond earring, they could receive the replacement cost of the full set by providing the insurance company with the remaining earring.

“Individuals with jewelry collections should install a home safe to protect items when not being worn,” Doyle said, and when travelling, items should be stored in a hotel vault where possible and not packed in luggage during transit.

Collectors of art and jewelry should also maintain detailed documentation on items in their collection, Doyle said, which can help expedite a claim if a loss occurs.

With e-commerce booming, online sales of both art and jewelry are growing, presenting a new set of risks.

“For individuals purchasing items ‘sight unseen,’ they should consider requesting details on condition and provenance, which is ownership history,” Doyle explained.

“It’s also important to understand how items will be packed and transported, as some online sales platforms work with general shippers.”

 

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