Rising Precious Metal Prices Prompt Warnings of Underinsurance for Jewelry

The BareStory

The prices for gold and other precious metals have risen substantially over the past year, leading insurance industry experts to advise jewelry owners to review their coverage. In recent trading, the price of gold was up approximately 58% over the last year to around $4,200 per troy ounce. According to one source, American Hartford Gold, the price was $4,193.34 per ounce on December 8. Over the same yearly period, platinum prices increased by 76% and silver by 84%.

This surge in value means the cost to replace jewelry may now be higher than what a standard insurance policy covers. According to a representative from Allstate, most homeowners and renters insurance policies have specific limits for jewelry, often capped between $1,000 and $2,500 for risks like theft or fire, and typically do not cover accidental loss. With gold jewelry comprising a significant portion of the global market, which Grand View Research estimated at $366.8 billion last year, many owners could be underinsured.

To address this potential gap, the Insurance Information Institute recommends that owners have their high-value items reappraised every few years. The institute also suggests "scheduling" jewelry, which involves creating a detailed list with appraisals to ensure proper coverage. Owners can increase their protection by adding a rider to an existing policy or by purchasing a standalone policy. A spokesperson for the institute stated that premiums for such coverage generally range from 1% to 3% of an item's insured value per year.

The increase in gold’s value is influenced by numerous factors. Gold is often viewed as a safe-haven asset during economic uncertainty and a hedge against inflation. Its price is also affected by supply and demand, interest rates, the strength of the U.S. dollar, and the policies of central banks.