This week, the cost of gold hit a record high of £3,000 per ounce. Now, to anyone outside of the world of investments or the jewellery trade, this figure has little meaning. But it is an important figure. So, what does £3,000 per ounce mean for the bracelet on your wrist or the chain around your neck? And more importantly, how does it affect your home insurance?
The simple answer is that you are likely underinsured now. The cost of gold has increased; therefore, so has the cost of replacing your gold jewellery. But the critical question is, by how much has the value of your jewellery increased? Sadly, there is no fixed ratio to determine an increase. The value of any piece of jewellery is a culmination of many factors. However, I can provide some context, thanks to a 9ct gold curb chain that has been repeatedly crossing my desk for the past seven years.
The chain in question weighs 22 grams. In 2018, it cost £1,300 to replace. By 2022, the replacement value had increased to £1,600, representing a 23% rise in four years. Today, that same chain would set you back £3,200—a 100% increase in three years. The total increase over the past seven years is a staggering 146%.
The last time I saw an increase like this in the cost of gold was just after the 2008 financial crash. And the implications will likely be as far-reaching for the jewellery trade as they were then. Everyone who owns any piece of gold jewellery will be affected. The value of heavyweight pieces will have increased dramatically. Individual pieces of jewellery that were once under your specified item limit. Well, not any more. And don’t forget the cumulative effect of these price rises. Even if you don’t have much gold jewellery, let alone anything near or over your specified limit. The cost of replacing all your jewellery in the event of a catastrophic loss will likely now exceed the limit of your total contents cover. So, whatever way we look at this, the vast majority are now underinsured.
I understand that getting updated jewellery valuations and reviewing your insurance cover sits around number 85 on your top 10 list of things to get done. But the increase in the cost of gold, and how far that pushes you into ‘underinsured’, has just dramatically elevated that list!
If you haven’t had your jewellery valued in the past three years. You need to do two things. Firstly, seek the services of a professional and independently registered valuer to obtain an up-to-date valuation for insurance purposes, such as those from the Jewellery Valuers Association (www.thejva.org/find-valuer). Secondly, irrespective of when you had your jewellery valued, contact your insurance provider or broker and discuss your levels of cover. You pay a lot of money for insurance, and it’s worthless if it doesn’t provide the coverage you need.
Leave a Reply