Floating Limits

One way clients can reduce their premium is by talking to their broker about their jewellery and watch wearing habits. Steve Moores, Client Director, advises:

“We often speak to new or prospective clients who have all their jewellery insured on a worldwide basis, all the time. This is often inappropriate and gives rise to a higher premium than is necessary. Rather than limit certain valuables to being insured in the safe only, which is restricting and requires that you let your broker know when you want to wear it, you can opt for a floating limit.”

What is a floating limit?

As mentioned above, some clients will benefit, in terms of a lower premium, by taking a “floating” jewellery and watches (sometimes known as valuables) limit. This works on the basis that not all the jewellery can be, or is, worn at the same time and so the remainder of the jewellery, is kept in the home safe.

You do not need to state exactly which items are in and which items are out of the safe. You need only choose your limit out of the safe at any one time, usually for special occasions. As the items can change, and the total figure up to a prescribed limit can vary, it’s known as a “float” or “floating limit”.

A floating valuables limit example

As an example, let’s assume you have £100,000 of jewellery, and that £25,000 worth of jewellery and watches is worn on a daily basis. On a special occasion, two additional watches and a necklace might be bought out of the safe, which might bring the total figure to £40,000.

You would therefore opt for a floating limit of £40,000. You would need to keep a minimum of £60,000 of your jewellery in the safe at any one time. The maximum that insurers would pay, i.e. for a theft of all your jewellery whilst out one evening, is £40,000.

How does a floating limit benefit me?

Insurers apply a lower rate to the in-safe figure than they do to the floating figure, therefore lowering the premium without affecting a client’s lifestyle or cover too much. In the above example, the difference in premium between insuring the jewellery on a worldwide basis versus in the safe with a floating limit could be as much as £500.

Can I mix a floating limit with jewellery that’s always in the safe?

Yes. You would need to specify which items of jewellery are always kept in the safe. You would pay a lower premium as above.

Is my safe suitable?

The home safe must be approved by an insurer. It must be of sufficient quality to protect the balance of jewellery left in it. In the above example, the safe would need to have a jewellery rating of £60,000 and a cash rating of £6,000. We can help advise as to what rating your safe should have.

The above is only a guide. Cover and rates vary from insurer to insurer and high floating limits are not always the best choice for everyone. Therefore, it is best to speak to a specialist broker like Howden.

To talk to us about floating limits, or any aspect of your home insurance policy, call 020 7543 2801.