Why Rising Gold and Precious Metal Prices Mean It’s Time to Review Your Homeowners Insurance

Gold prices are on the rise again following the latest Fed rate cut. The price hit its peak Monday Dec. 15, as spot gold rose to $4,338.56 an ounce. That’s about 58% over last year.

Since 2000, the price of gold has increased roughly 1,400%.

In addition, platinum and silver prices (per troy ounce) have jumped 76% to about $1,651 and 84% to about $58, respectively, in the same period.

For homeowners who keep fine jewelry or family heirlooms in their home, these spikes in prices mean it might be time to review homeowners insurance to see if your coverage is sufficient.

Homeowners insurance coverage for jewelry: Is your standard coverage enough?

Standard homeowners insurance policies generally offer personal property coverage for items such as jewelry; however, the coverage limits are usually quite low.

Your basic coverage will typically have a "valuable articles endorsement" section that will denote how much is covered. “Homeowners insurance policies typically include a low personal property coverage limit for jewelry, generally $1,500 to $2,500, which can be far less than the average individual's jewelry value,” Sain Rhodes, real estate expert at Clever Offers, explains.

Therefore, you need to review your policy carefully. Even if your total personal property coverage is high, coverage for jewelry could be treated differently. You could have $200,000 in coverage, but still only $1,500 allotted for jewelry. 

Damaged vs stolen jewelry: What will insurance cover?

Homeowners insurance policies generally fall into two categories based on what they cover: named-peril policies and open policies. Named-peril policies cover only the specific incidents (or "perils") explicitly listed, such as fire or theft. Open policies, conversely, cover everything except for specific exclusions listed in the policy.

Theft is considered a covered peril for most home insurance policies, but again, you are still subject to the liability limits of your policy. 

Damaged jewelry may be covered if it is harmed by a covered peril, such as a fire, but again, only up to your policy limits. 

How can I increase my insurance coverage for jewelry?

The first step is assessing just how much coverage you need for your jewelry. 

“Most people do not own a significant amount of pure gold jewelry,” explains Joshua D. Glawson, a content manager at Money Metals Exchange. He explains that a 14k necklace is only about 58.3% pure gold, roughly 8 grams. At today’s market value, that could fetch roughly $645. “But likely only going to fetch around $600 with an insurance claim without any receipts. Also, as the price of gold fluctuates, the insurance company is only likely to pay what the current market value is, not necessarily what you paid for it,” he adds. 

That’s why an appraisal, with photos and receipts, should be your first move. Understanding what you own will help you make better decisions. 

If your existing personal property coverage limit on jewelry is close to the amount you need, you could contact your insurer to inquire about raising your coverage limit, with these receipts in hand. Your premium will likely increase, but it could be a good solution if you don’t need to increase your coverage substantially. 

As for how often you should take stock of your collection, it depends on how much jewelry you own.

“Professional assessments should be renewed every three to five years, or more frequently if there are significant swings in precious metals prices,” says Rhodes.  

“Given the substantial price increases in the gold market and ongoing volatility, I suggest reassessing the $25,000 and above collection annually. Even though appraisals typically cost $150 to $400, depending on the number of items valued and the appraiser's expertise, the cost is negligible compared with the potential risk of being underinsured.”

You can also look into purchasing standalone jewelry insurance policies, which can cost $150 to $600, according to Rhodes. If you choose this route, be prepared to schedule your collection.

“Scheduling jewelry means listing each high-value item individually on your policy,” explains Fran Majidi, an insurance expert at Modotech Inc.

Getting insurance from a specialty insurer allows homeowners to buy a rider as an add-on to a homeowners policy that expands coverage for specific items. The upside to the add-on rider is that some do not have a deductible and have extended coverage. 

“The typical cost of a rider is about 1% to 2% of the insured value per year and includes coverage when you travel or are robbed of the jewelry while you are wearing it away from home”, Majidi explains.