Why now is the time to check the value of your gold

At the time of writing, the price of gold is nearing is its all-time high at $2,673.40 per ounce¹. Between April 2023 and October 2024, the value of gold has increased by 29%¹ and over the last five years it has risen by 78%². Whilst this might seem most applicable to investors, it could also be relevant for you and your home insurance policy.

If you have gold in your home – whether it be a family heirloom, a gift, jewellery or coins – you should consider a valuation as if you need to make a claim you may find yourself underinsured.

Consider this scenario: You suffer a break-in and your jewellery collection is stolen. Only one piece within the ten piece collection is gold. You make a claim and submit the valuation to the insurer – the valuation is three years old. Due to market fluctuations the gold piece is underinsured by ‘X’%.

This is important for the following reasons:

• In the event of a claim there will be a shortfall
• Your insurer may apply the average clause. This states that if you are underinsured, insurers can reduce the amount they pay out in the event of a claim. For example, if you are insuring items for 70% of the correct sum insured, and therefore paying 70% of the correct premium, the insurers will only pay out 70% of your claim – in this example on the whole collection, not just the gold.

Given the current value of gold versus five years ago it easier than you think to fall into the underinsurance trap. So, what can you do to avoid this? Here, Private Client Director Steve Moores, offers some advice.

The importance of a valuation

A valuation not only prevents underinsurance but it’s evidence to support claim, and in our experience a claim is often settled much more quickly when there is an up-to-date valuation. A good valuation will include a description, weight, size and a photograph, the date and the valuer’s name and credentials. If these elements are missing then an insurer may reject the claim. A purchase receipt is not a valuation.

Insurers will require any valuation to be for “insurance purposes” and for retail value. If you’re having jewellery valued then consider how you would replace it in the event of a loss. Would you want a brand new replacement with a modern equivalent (New Replacement Value), second hand replacement value (which can be more than the retail value if there’s a waiting list for a piece.

We have taken the time to build relationships with valuation specialists and can point you in the direction here.

Does an increase in my gold’s value mean higher insurance premiums?

Your insurance premium is based on your sums insured and the most expensive thing to insure £ for £ is jewellery. However, there are still steps you can take to manage the premium.

• If you have a gold coin collection it should be insured under the Gold, Silver and Plate definition, which is either under the Valuables or Fine Art section of your contents insurance policy and not as jewellery. This will reduce the premium as gold usually has a lower “rate” than jewellery which is more likely to leave the house and is therefore a higher risk.
• If you have gold jewellery, then talk to us about your wearing habits. 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. To find out more read our article: Floating Limits.
• Having a home safe is not only a great way to protect your valuables but it can influence your home insurance premiums. We appreciate that choosing a safe can be a bit of a minefield, so here’s some advice: Safety First – top tips for your home safe. Please note that any safe you choose will need to meet insurer requirements.

How Howden can help

Although the value of gold is on a particularly high trajectory increases aren’t unusual and the price of diamonds and precious metals are particularly volatile. Some of the insurers we work with will give a 25% or even 50% uplift for a number of years after a valuation to help protect policyholders from rising prices.

If the worst does happen and you need to claim the Howden Private Client team has a dedicated claims service who will reduce the burden of making a claim and take control over the claims management process, leaving you to be as involved and you want or need to. It’s just one of the many benefits of using a broker. Discover even more advantages by reading: Why you need a broker for your home insurance

To speak to us about the insurance you have in place call 020 8256 4901 or email privateclients@howdeninsurance.co.uk

Sources:

1. Gold Prices - 100 Year Historical Chart | MacroTrends
2. 5 Year Gold Price Chart (bullionbypost.com)