Jeweller’s block insurance is designed to cover the risks jewelry manufacturers and sellers face. Jewelry block insurance covers the loss or damage to jewelry, including watches, valuables, ornaments, cash, and currency notes, against theft, burglary, and other perils. This policy is designed particularly for the makers and sellers engaged in the jewelry business, and at the same time, it can be customized to their needs and requirements. Jewelers block insurance is a comprehensive policy that provides cover to the insured property whilst in the premises of the insured, during transit, and at any other premises such as exhibitions and trade fairs. This policy also protects the machinery and equipment used in the jewelry manufacturing process, thereby making it a bundled policy for the jewelry shop owners. It is offered only by a few insurance companies, and the underwriting conditions differ from one insurer to another.
Before taking the policy, one important thing to remember is that the correct value or the cost price of the property should be declared failing, which could result in under-insurance. Jewelers block insurance is not limited to jewelry sellers and makers. It can even be taken by the evaluators and people repairing and restoring the jewelry. It is important to make a proper declaration of the risk when taking the policy, as it would influence the underwriting decisions of the insurance company.
There are 5 types of covers available in commercial crime insurance which can be related to the internal and external perils faced by a business.
This section is an all-risk cover that protects the insured property on the premises. It compensates the insured in case of loss or damage to the insured property whilst on the insured’s premises. The property could be jewelry in display windows, locked safe, private locker, or elsewhere as described. The property comprises jewelry, diamonds, and pearls, including cash and currency notes at the insured premises. It covers the losses due to Fire, Theft, Burglary, Earthquake, Flooding, etc.
This section covers the loss or damage to the jewelry whilst in the custody of the insured or their representatives. There could be many instances where the firm’s directors, partners, or employees have the jewelry in their possession whilst showing it to their customers or carrying it to or fro from cutters or brokers. The jewelry would not be stored on the insured’s premises during that time. In such circumstances, risks such as theft or robbery of the insured property could be covered under this section. For this section to be applicable, the risk should have happened whilst the insured property is in the custody of the insured or his representative. This section doesn’t cover the currency lost whilst in the insured’s custody. The insured should be able to produce appropriate document evidence suggesting the entrustment of jewelry in their custody.
This section covers the loss or damage to the insured property whilst in transit from one location to another. The transit could be through Air, Rail, registered parcel Post through Road, inland waterways, or Canada. The stock should be in transit only after ensuring adequate and proper packing and security. Angadias are a community of people who engage in gold and diamond transport from one location to another due to their high integrity and low evasion. Angadias has been engaged in the transit business for many decades and, therefore, found coverage in jewelry block insurance policies. Many business owners feel safer transporting jewelry through Angadias than other transport modes. Most transporters also do not accept valuables to be transported as it would be difficult to track each and every valuable item.
This section covers the loss or damage to the office equipment due to an insured peril. Insured perils include fire, explosion, lightning, riot, strike and malicious damage, typhoons, hurricanes, cyclones, theft, burglary, etc. The office equipment and machinery that is used in the jewelry-making process will be covered under this section.
Peace of mind
The best benefit for any jewelry shop owner is peace of mind, which could only come if their valuables are protected. Jewelry is the most precious metal, which is subject to theft and robbery attempts, often by burglars. The shop owner could avoid bankruptcy with a proper jewelry block policy. The best way to ensure peace of mind is to have an adequate jeweler's block insurance policy, which provides complete protection for the jewelry stored inside the premises by taking proper care. In most of the cases where the jewelry shops were attacked and looted, it was difficult for the police to make 100% recovery as it is highly difficult to trace the movement of gold and other valuables, unlike the currency, which would have number series that could still be tracked to a certain extent. Considering this, it would be highly beneficial for small business owners to take a jeweler block insurance policy.
Protection from theft and robbery
The main risk jewelry shop owners face is theft and robbery of their jewelry, and the jewelry block insurance policy protects them from such risks. There are instances where the jewelry shops were robbed in broad daylight, and the burglars forced their way into the shops by digging tunnels or other ways. It would be difficult for the owners to anticipate the attack beforehand and take preventive measures. All they could do was put in place adequate preventive measures or safeguard their premises with the help of security and CCTV cameras. Most of these preventative measures could only be useful after the crime is committed and might not be effective in preventing the crime altogether. As discussed above, Section 1 of the policy covers the insured property against theft and robbery. The policy also covers the jewelry displayed for sale purposes against theft or robbery of such jewelry.
Transit cover for jewelry
The other major advantage of a jewelry block insurance policy is that it provides the much-needed transit cover for the transportation of jewelry. There can be insurance when the jewelry needs to be transported from one place to another for specific purposes such as display, customer place, etc., and peril could happen at any time for which the insured needs adequate protection. Transit cover comes with certain conditions, such as the transit vehicle should not be a private vehicle used for pleasure purposes, transit should be accompanied by an armed guard, an employee, or the owner of the insured jewelry store should travel with the insured property. Transit cover would be valid only if the insured meets the mandatory conditions. Transit could be through a raid, road, air freight, or Angadia. Jewelers block insurance could probably be the only policy in India and abroad to cover the transit by human beings. Angadias are a group of communities that transport valuables from one location to another and have the lowest rates of defaulting. They primarily transport valuables from one point to another in India and work with utmost integrity, which is why they mention them in the jewelry block insurance policy.
The other major advantage of jewelry block insurance is that it can be customized per the customer’s needs. Customers can mention their requirements, and the policy would be tailor-made to suit the insurer’s requirements. This would help the customers as their needs differ, and a one-size-fits-all approach might only suit some. It is important to note that certain sections of the policy are compulsory, whereas certain others are optional and are completely dependent on the customer. The premium would be calculated based on the coverage opted by the insured. One can even broaden the policy’s scope by including accidental loss, fire, flood, etc.
The policy also has an option to avail voluntary deductible, which is nothing but the assumption of responsibility by the insured in case of an event. For example, if the insured opts for a 20% voluntary deductible, then for every claim, the insured has to bear the 20% loss, after which the insurance company would pay the remaining amount. As the name suggests, voluntary deductible is voluntary on the part of the insured. There is also a compulsory deductible, which is mandatory for every insured as per the IRDAI regulations. A voluntary deductible would be over and above the compulsory deductible. Even though there would be a decrease in premium with an increase in voluntary deductible limit, one should be cautious of the risk they accept.
Jewelry block insurance is a bundled insurance policy with multiple risks insured under a single policy. In addition to jewelry, the policy also covers other valuables such as precious stones, watches, antiques, pieces of art, and many other things. The cover under the policy can be bundled as per the needs and requirements of the customer.
The first thing to consider is the sum insured required. While considering the sum insured, it is important to consider all the property to be insured. Leaving some portion of the property could result in under insurance at the time of claim settlement, which ultimately undermines the logic of taking a jewelry block insurance policy. The sum insured should include the jewelry, cash, furniture, and other property on the premises. Sum insured can also include electronic equipment such as Laptops, Computers, UPS, CCTV cameras, etc. The sum insured under Sections 1 and 2 should represent the jewelry items’ cost, not the selling price. Cost price is the cost incurred to manufacture the product, whereas the selling price includes the profit margin of the insured. Since the profits are not covered by property insurance, the selling price should not be the basis of insurance. The sum insured in sections 1 and 2 should be at most 10% of the invoice value, which is the cost price. The sum insured for section 3 should represent the maximum loss that could arise from a single event at any point during the policy period. This should be decided by the maximum amount of jewelry displayed during the policy period in any location. The sum insured under section 4 should mention the annual carrying limit of the transit. This sum insured should also mention the maximum value in transit during the policy period. Generally, the sum insured under the policy could be the maximum value of the jewelry stored on the premises. The sum insured is usually calculated as a Cost of +10% of the invoice, where this 10% accounts for freight and duty, finishing, glazing, making charges, etc., which could be incurred during manufacturing.
As for any insurance policy, the declaration should be true to the insured’s knowledge. The insured should not make any false declarations when taking the policy, which could influence the material risk under the policy. The acceptance of the policy, as well as the premium to be paid, depends on the input provided by the customer in the proposal form. Therefore, providing accurate details about the customer’s knowledge is crucial when filling out the proposal form. Incorrect declaration leads to moral hazard in underwriting, which could lead to rejection of the claim or cancellation of the policy. It is important to make a true declaration in the proposal form as the basic principle of insurance states that the customer should provide details with utmost good faith when taking the policy. Any information influencing the material risk under the policy should be communicated correctly. The insured should also ensure that the sum insured of the property is represented accurately, as any underrepresentation could lead to under-insurance.
Insured should also take certain safety measures such as installing CCTV cameras, 24*7 security, placing the jewelry in the locker after shop hours, etc. The security measures taken by the insured decide the premium as these measures might either reduce the occurrence of risk or the chance of recovery in case of a risk. It is also important to keep the condition of these safety measures private from the proposal form, as it could lead to a breach of utmost good faith. Other safety measures, such as building construction, leakproof entrances or exits, etc., should be taken care of by the customer. Having proper safety measures in place would increase the chance of acceptance of a proposal and help in the claim settlement process. Safety measures also include armed vehicles while the jewelry is in transit from one location to another. It is important to continue the safety measures to ensure smooth claim settlement even after taking the policy.
The other important thing to check is the add-on covers or riders under the policy. Add-ons provide extra coverage to the insured by increasing the scope of the cover. Add-ons such as Earthquake, Terrorism, STFI Cover, Exhibitions or Trade fairs, and dishonesty of cutters, goldsmiths, and refinery owners could be taken by paying an additional premium. The premium to be paid would be calculated based on the risk to be covered by the insurer. Including add-ons would increase the premium, and therefore, it is advisable to select the add-ons carefully. Only required add-ons should be taken by the insured customer.
The most important thing in jewelry block insurance is underinsurance. Underinsurance happens when the property insured is less than the actual property to be insured. For example, if the insured has Rs. 1 Crore valued property but the sum insured is Rs. 70 lakhs only, then it becomes under insurance. Underinsurance eats into the claim settlement amount and is the major discontent between the insurer and the insured. Underinsurance should be avoided by providing the accurate cost price of the entire property to be insured. Insured would even have the option to avail of Cost price +10% of the cost price to cover the costs incurred by freight, duty, making charges, etc. In this way, the insured can ensure that the sum insured accurately represents the property value.
Step 1: The first step in the jewelry block insurance claim settlement process is to inform the insurance company regarding the theft, robbery, or any other accident leading to loss. The insurance company would then provide a claim reference number or claim intimation number that can be used for future reference. The insurer would ask for the circumstances leading to the accident or theft and a brief description. At the same time, the insured should file a complaint with the police and any other prescribed authorities.
Step 2: In the next step, the insured should prepare the evidence, such as CCTV footage, and cooperate with the investigation. Police will conduct a preliminary investigation of the premises, followed by the surveyor from the insurance company. The surveyor would assess the loss and cross-check the same with the invoices submitted by the insured. Police investigation reports and other reports would help the claim settlement process.
Step 3: The third step is where the insured should submit the required documents to the insurer to process the claim. The insurer would decide the quantum of the claim depending on the report submitted by the surveyor.
Step 4: In the last step, the insurer would settle the claim on a reimbursement mode after receiving the required documents. If the insured is dissatisfied with the claim process or amount, they can approach the ombudsman and follow the process.
Documents required for Jeweller’s Block Insurance Claim: