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With engagement season well underway, those close to being hitched may be looking to insure their prized rings. And for some, that band could mark the start of a highly valued jewelry collection that falls under the purview of fine art insurance.
The range in private jewelry collections covered by insurance is broad – from a few pairs of items the insured wears on a daily basis to collections valued in the hundreds of millions.
“Just because your collection is on the smaller size, that doesn’t mean it won’t grow and that it’s not exposed to the same perils that a larger collection might be exposed to,” said Kyle McGrath, fine art and specie underwriter at XL Catlin. “Quite frankly, it warrants a standalone policy as much as any other sized collection.”
There has been enough demand from clients that were starting their valued collections, particularly high-net-worth millennials in New York, that XL Catlin has introduced an insurance product intended just for them.
“There’s a huge opportunity for us with what we like to call new collectors. They’re young in terms of the size of their collection and how recently they decided to start purchasing these types of assets,” said McGrath. “As a result of that, we have partnered with one of our closest brokers, Arthur J. Gallagher to formulate a new product that’s available here in the US that’s essentially targeted specifically towards this demographic.”
The Five for Five policy is a package of specialized insurance coverage for not only jewelry, but also fine art, wine, and cyber theft and identity theft. It has standard set limits, but as the collector adds to their collection, they can choose to purchase limits that are set higher than those initially offered.
Whether a collector is a newcomer or veteran, the risks are universal and depend on what the insured does with their necklaces, bracelets, rings, and earrings. Of course, some like to actually wear those valued, and often sentimental, possessions.
“Jewelry kept in a vault has a much lower risk profile than jewelry that’s kept out of the vault. As we’re all aware, the greatest risk that we see is the daily wear,” said McGrath. “An earring falls off, or the ring falls down the drain, and that is typically accidental loss rather than the sort of high profile theft that you tend to hear about because it might make the news.”
Risk also lies in the customer’s environment. With natural catastrophes on the rise, how valuables are stored becomes a key when insuring them.
“We want to understand what the storage is, what the storage looks like, whether it’s being kept in a fireproof safe in the insurer’s home and what the disaster plan is in the event of a natural catastrophe,” said the XL Catlin underwriter.
Handling claims quickly is important in the fine art business, especially as clients’ private jewelry collections can have high sentimental value.
“The insurer want to do everything they can to have the claim settled in as easy a manner as possible because at the end of the day, whether there’s a family heirloom or gift, there’s usually some emotional tie to the object,” said McGrath.
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