It’s in situations like these that underinsurance can occur. If the worst happens, you could be left seriously out of pocket and without the compensation needed to repair or replace items. In this article, we look at how to ensure your jewellery is correctly insured for the long term.
Why your jewellery may be worth more than you think
When insuring jewellery, most people will use one of two figures: what they paid for it, or a past valuation. However, depending on when the item was purchased or valued, both figures could be inaccurate.
The purchase price often doesn’t reflect its value in insurance terms. Insurance covers the cost of replacing an item at today’s prices, which means accounting for current retail costs and trends, inflation, the present value of gems and precious metals, craftsmanship, any hallmarking or certification, and VAT. If you purchased a valuable piece of jewellery twenty years ago, there’s likely to be a difference between the purchase price and today’s replacement value.
An outdated valuation presents you with a different problem. Even if it was accurate when it was written, the market may have changed significantly in the meantime. Jewellery is not an asset with a static value. Its value fluctuates with the price of raw materials, changes in exchange rates, shifts in consumer demand, and changing trends in certain makers and stones. This means that a five or ten-year-old valuation will almost certainly be outdated.
Gold, platinum, and silver are globally traded commodities. Their prices rise and fall in response to inflation, interest rates, geopolitical uncertainty, and currency movements – all of which can be unpredictable and affect the cost of replacing a piece that contains them.
The scale of the shift over the past two decades is striking. In 2006, gold traded at around £320 per troy ounce. Currently, that figure stands at around £3,900 – an increase of more than tenfold in twenty years. While a ring bought in 2006 contains the same amount of gold it did when it was made, that precious metal costs many times more to replace. Even a piece that is now in poor condition or broken could be worth a lot more than it was originally.
Silver prices have also risen significantly in recent times, and while platinum prices have now been outstripped by those of gold, they have still risen over the years. If you have collections of gold, silver, and platinum jewellery, the difference between the insured value and the current replacement cost could be significant.
Gemstones and luxury brands
Gemstones also have their own market dynamics, often driven by scarcity, provenance, and changing fashions. High-quality diamonds, rubies, emeralds, and sapphires, particularly those with recognised certification, have appreciated significantly over time. As new mining becomes more expensive and ethical sourcing requirements tighten supply, prices for fine stones continue to rise.
Pieces by prestigious houses – Cartier, Tiffany, Van Cleef & Arpels, Bulgari, and others – often command a premium that far exceeds the intrinsic value of their materials. A piece insured at its material value alone – the so-called ‘scrap value’ – is almost certainly underinsured if it was made by a highly sought-after brand.
The same logic applies to watches. Timepieces by makers such as Rolex, Patek Philippe, and Audemars Piguet have seen their values rise sharply, in some cases far exceeding their original retail prices. A watch insured at what it cost when purchased, particularly if it’s a limited reference or a discontinued model, may now be significantly underinsured.
The risks of relying on an outdated valuation
The financial consequences of underinsurance could see you receive less than the full value. This means that, if you are insured for less than the current replacement value of your jewellery, you could receive less than you need to replace it.
For example, you insure a piece in your jewellery collection for £5,000, based on a valuation carried out in 2015. A current valuation places the piece at £10,000. If that single item is lost or stolen, your insurer may pay out only £5,000, leaving you to cover the rest when purchasing a replacement. While high-net-worth policies generally don’t apply the ‘average clause’, be mindful that a regular household policy (with cover for jewellery) may do so. If the average clause was applied to the example above, you would receive £2,500.
Situations like these occur frequently, and often because a policyholder hasn’t reviewed their cover recently.
The three-to-five-year rule
The standard recommendation from insurers and valuers alike is to have your jewellery and watches professionally revalued every three to five years. If your collection includes significant pieces or you have inherited items that have never been formally assessed, the case for acting sooner is stronger.
If your jewellery is insured under a high-value home insurance policy, it may include index-linking. This is designed to automatically adjust insured values in line with inflation, meaning that the amount you’re insured for will increase at renewal. This can provide you with a degree of protection, but jewellery prices aren’t only affected by inflation; they can be pushed up or down by the markets in precious metals, gemstones, or branded pieces. For specific high-value items, insurers may request evidence of condition and ownership when a claim is made, and some policies require periodic revaluation to provide cover.
When seeking a valuation, it is important to use a qualified professional who is a member of the Institute of Registered Valuers (IRV), the UK’s recognised authority for jewellery valuation. A high street jeweller may offer a free assessment, but the resulting document may not meet an insurer’s standard. An IRV valuation provides a detailed, legally defensible appraisal that specifies replacement value rather than resale or second-hand value.
You can find an accredited IRV specialist through the National Association of Jewellers’ Find a Valuer tool.
When standard cover isn’t enough
If you have valuable jewellery, it goes without saying that standard home contents insurance won’t give you the cover you need. These policies typically apply a single-item limit of around £1,000-£2,000. Any piece valued above that threshold will be fully covered only if it is specifically listed in the policy. A collection of modest individual pieces that together have significant value may also require specialist treatment.
Specialist high-value home insurance is designed precisely for this situation, providing agreed-value cover, worldwide protection, and the flexibility to insure individual items at their current replacement cost.
Taking stock
The most valuable pieces in a jewellery collection are often those that have been owned the longest, which makes them exactly the ones most likely to be carrying an outdated insured value. Using a professional revaluation can be the difference between a full settlement and receiving less than you need when you come to make a claim.
