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Jewellery Insurance: Accurate valuation is the key

Under householder's policy, the sum insured of the jewellery covered is based on its market value at the time of taking the policy

Last week, Tata AIG General Insurance launched ajewellery and valuables insurance cover for high net worth individuals — a first of its kind. While both public and private general insurance companies have jewellery insurance covers, they are a part of the householder's policy.

The annual premium for a cover of `1 crore will be one per cent of the sum assured. It could vary depending on the risk evaluation of the jewellery. This product will offer an all-risk cover — loss reimbursement, repair and restoration, preservation and storage assistance.

When you take a householder's policy and get your jewellery covered under it, the sum insured of the jewellery is based on its market value at the time of taking the policy. An accurate valuation report given by the government-approved valuers is, therefore, very important.

As part of householder's policy

In the home insurance policy offered by ICICI Lombard, the value of jewellery covered is limited to 25 per cent of the total value of the insured contents. So, if your total contents covered are valued at `10 lakh, only `2.5 lakh worth of jewellery can be covered.

However, This percentage can sometimes be negotiated after referring the case to the underwriter of the insurance company. Here, your jewellery is insured against any damage or loss caused due to fire, natural calamities or burglary. However, the cover is applicable only if the loss or damage take place within your residential premises covered by the home insurance.

Premium

A home insurance policy covering the contents of the house is valid for a year. And the premium payable is typically calculated per lakh of the sum insured. It could be `300 per lakh for covering contents, including jewellery against burglary and theft, or almost `1,000 per lakh for an all-risk cover.

The premium could at times be calculated as a percentage of the total sum insured. It could range between 0.3-0.5 per cent of the sum insured. So, for a sum insured of `1lakh, the premium payable will be `300-500.

Claim settlement

Once you have taken an insurance cover for your jewellery, you must keep a few points in mind with regard to claim settlements.

Scenario 1: Assume your jewellery gets stolen. You had got it insured for `1lakh based on avaluation done two years earlier. Even if the market value of your jewellery today is `1.5 lakh, you can claim only `1 lakh. To avoid such a situation, you have the option of over-insuring your jewellery in anticipation of escalation of value.

But, say you over-insure your jewellery for `1.5 lakh. And, you lose it before it has attained that value. In this case, you will receive as compensation the market value of the jewellery, and not the sum insured.

Scenario 2: One of your jewellery pieces gets damaged. The sum insured was `50,000.

Say, the insurance company pays you `10,000 for repairing the damage. The sum insured will now get reduced to `40,000. However, when you receive the compensation cheque, you may get the amount adjusted against an additional premium. This will ensure that your jewellery is valued correctly

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