Gemstones are skyrocketing – so make sure you are insured
The value of gemstones is reaching record highs, which means that today more than ever, it is essential to properly appraise and insure your jewelry.
The Mail on Sunday hosts a gemstone masterclass – and finds that many of us should take immediate action to avoid the risk of losing a lot of money.
The glittering stone looks like a cold pebble when placed delicately in my palm with long tweezers. Gemstone expert Tobias Kormind then hands me a “magnifying glass” – a magnifying eyepiece – to study it closely. In this luxurious Mayfair showroom in central London, I hold my breath – I don’t have time to sneeze.
A Girl’s Best Friend: Our lack of knowledge means those with a home jewelry box full of trinkets and heirlooms may have no real idea of their monetary value.
“What do you think it’s worth? Kormind asks. I reply that this is clearly a trick question, as the stone is too big to be a real diamond – just a costume jewel worth a few pounds.
“Wrong,” Kormind said. “He’s worth half a million pounds. I return it quickly and carefully.
Kormind, who is the co-founder of online jewelry dealer 77 Diamonds, isn’t surprised that I failed the test so miserably. He explains that few of us have any idea of the true value of gemstones. He believes that a lack of transparency in the gemstone industry doesn’t help, but it’s sometimes intentional – our ignorance offers traders the opportunity to overcharge buyers and underpay sellers.
But our lack of knowledge means those with a home jewelry box full of trinkets and heirlooms may have no real idea of their monetary value.
As prices have increased in recent years, even those who have had appraisals in the past may not know the current value of their gemstones.
Heather Callaway is a fellow of the Institute of Registered Valuers and Vice-President of the National Association of Jewelers. She warns: “There is a huge risk that your jewelry will be undervalued – especially with the prices of some coins soaring lately caused by a drop in supply with the closing of the gemstone mines during the lockdown. and a growing demand among middle-class Asians after gemstones. An assessment at least every five years is important.
If your jewelry is lost or stolen and is not properly valued, it can void your policy and some insurers may refuse to pay a claim.
Know their value
Gem valuations are based on the “four Cs,” Kormind explains. These represent carat, color, cut and clarity.
The carat is the measure of the weight of gemstones – one carat equals 200 milligrams. The diamond in my sweaty palm is 10 carats – so it weighs two grams.
Color also affects the price. Sparkling white diamonds tend to have the highest price tags – the more yellow they are, the cheaper they are.
However, those with a slight blue or pink tint have increased in value by up to 200% and 400% respectively over the past ten years.
Although diamonds are the most valuable stones, gemstones, such as emeralds, rubies and sapphires, have seen price increases of up to 2,000% over the past decade (see right) .
The cut – the way a craftsman cut the stone to make it shine – is also vital.
Clarity too – looking for imperfections. Kormind says, “You might find a one carat diamond worth between £ 1,000 and £ 20,000 depending on color, cut and clarity.”
Insure your gems
Keep track of all your jewelry so you have proof of what you own to show your insurer if you need it.
Take photos and keep receipts if you have them. Make sure to keep this documentation in a safe place, but separate from the jewelry itself.
Many insurers require you to itemize all jewelry valued over £ 1,000. If you don’t, they might not pay. Some insurers require professional valuations, others are content with rough estimates.
Malcolm Tarling, spokesperson for the Association of British Insurers, said: “First of all, you need to talk to your home and content insurance provider to see what he really wants – because he doesn’t. It may not be necessary to spend money for a professional assessment if it is not necessary.
“But you should definitely have an idea of what family heirlooms are worth.
Tarling adds, “You can have pieces that have been passed down to the family that have enormous sentimental value, but are worth nothing – or they turn out to be priceless treasures.
“You have to have them valued so that they are insured at their fair value. ”
In addition, review your records every few years as the values change.
Callaway adds, “It can be heartbreaking when the first time someone comes to us is when it’s too late – and valuables have already been lost or stolen.
“The onus is on the owner to prove value, so having an up-to-date detailed inventory is essential, as insurers are not required to accept old or poorly described valuations. ”
The 150-strong Institute of Registered Valuers offers professional advice and quotes that should be accepted by insurers.
The institute is linked to the National Association of Jewelers, with 2,200 members who can also provide reviews.
They provide itemized parts accounts and can charge £ 50 per item. Some jewelers and auction houses, like Bonhams, offer free appraisals and estimates.
If you have particularly expensive jewelry, you might have a hard time getting coverage under a standard home and contents insurance policy. In such cases, consider purchasing a separate policy.
Coverage for valuables worth £ 10,000 or more and can cost around £ 100 per year. Jewelry insurance typically costs one to two percent of the value of the insured treasures.
Prevention is better than cure
A safe is not only a practical precaution, it may also be required by your insurer.
Consult a professional locksmith who is a member of the Master Locksmith Association for advice.
The security of a safe can be measured using strict manufacturing standards that are endorsed by the Association of Insurance Surveyors.
A basic safe rated ‘S1’ covers theft up to £ 2,000 in cash and £ 20,000 in valuables.
Some manufacturers of safes follow the European safe standard EN1143, which has its own filing system. A safe rated ‘0’ is acceptable for up to £ 6,000 in cash and £ 60,000 in valuables.
A quality safe can be purchased from £ 400, but plan on at least an additional £ 150 to have it professionally installed and bolted to solid walls.
And if you buy …
Evaluating objects with an untrained eye is difficult. That is why Kormind advises buyers to ask for proof of its quality.
“Unfortunately, there are some unscrupulous dealers – so you can get ripped off unless you know what you’re doing. Never buy stones without quality certification.
“The one we recommend is the GIA – the Gemological Institute of America. If a reseller can’t provide it to you, ask yourself why.
Diamonds purchased in Great Britain are subject to 20 percent VAT. If you make money on the investment when you sell it – and the stones are worth more than £ 6,000 – there is a minimum 10% capital gains tax on profits above an annual exemption of £ 12,300.
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