With diamond prices are increasing by as much as 43% over the last six months, they are rapidly becoming an attractive alternative to the volatile stock market, as long as they are adequately insured.
Over the last year, the value of large diamonds has increased by an average of 30%, while the price of platinum has almost doubled, far outstripping general price inflation.
But insurance broker Macbeth Premier Clients says many jewellery collectors risk underinsurance in the wake of spiralling precious metal and diamond prices.
Paul Macbeth at Macbeth Premier Clients said ‘It is the responsibility of the policy holder, not the insurer, to ensure that their sums insured adequately represent the cost of replacing items. If they do not, in the event of a claim, they will receive no more than the sum insured or the single article limit, leaving them out of pocket’.
He said that the insurers generally apply index linking to insurance policies based on the general index of retail prices, rather than an index which specifically tracks changes in the cost of jewellery. While the sum insured for specified items will increase in line with inflation, it does not necessarily mean that it will keep pace with increases in the jewellery market.
Unspecified jewellery cover is also subject to index linking by insurers. Unspecified jewellery cover always contains a single article limit which can be easily exceeded if valuations are out of date.