All about the free insurance offered by jewellers on gold purchases

Lost your jewellery to an incident of theft while travelling with the piece or due to burglary? Get the bill and check with your jeweller if the product you purchased was insured.

Several jewellers have been offering a free insurance cover to customers on jewellery purchases. PC Jewellers, Popley Jewellers, PNG Jewellers, Malabar Gold & Diamonds, ORRA, Caratlane, SLG Jewellers, Ratnalaya Jewels, ejohri and Kalyan Jewellers offer a free jewellery insurance cover to their customers.

How the coverage works

This insurance cover secures the risk of damage or loss of jewellery under circumstances such as theft, burglary, during extreme events such as riot, earthquake, flood or storm. “The insurance is an added benefit to the customers,” says Dipu Mehta, Managing Director, ORRA.

While no formal insurance policy document may be handed out to you, the stores display “free insurance” offerings on signages, websites and even their advertisements make a brief mention of free insurance.

Since the insurance product is not standardised across all jewellers, you need to check the extent of insurance coverage from your jeweller. Even the period of coverage would differ, with most local jewellers offering the free jewellery insurance cover for a limited period of one year. “For the first year, ORRA pays the premium on behalf of the customer. From the second year onwards, customers have the choice of renewing the policy with the insurance company,” says Mehta.

The product range offered under the free insurance promise is limited in certain cases. For instance, Senco Gold & Diamonds and SLG Jewellers offer this only on the diamond jewellery range. “Insurance does not apply on loose solitaires, gift cards and products below Rs 10,000,” mentions Candere.

When it comes to sales in COVID-19 times, jewellers are offering free transit insurance for purchases made online. Only the loss of the product while it is being transported from the warehouse to your home would be covered. “The insurance is extended to you so that you can feel safe while buying your favourite jewellery online,” states PNG Jewellers.

Making claims

One challenge is to prove how you lost the jewellery. “Any kind of negligence with respect to the jewellery piece will not be paid for under the claim,” says the insurance personnel handling the claims for Caratlane.

The exclusions under the policy of Kalyan Jewellers mentions that loss due to negligence or when the jewellery is left unattended will not be covered.

To make the understanding of the coverage simple for jewellery buyers, Rajiv Popley, director of Popley Group says, “Any loss for which you can register a police First Information Report (FIR) is covered under the insurance.”

So, if you left your ring in the hotel washroom and couldn’t trace it when you were back, the claim wouldn’t be honoured as it would be treated as negligence on the part of the owner.

Popley recollects two claims that had been registered against their free jewellery insurance offering. “One of the customers was in a temple and had lost the jewellery due to theft. Since the case was registered with the police and there were eyewitnesses to prove, the claim was paid,” he adds.

Registering claims

Though the insurance cover is offered to you by the jeweller, you would have to seek help externally to get the claim processed. Jewellery stores and even call centres would take no responsibility of the insurance claims. You would be diverted to an insurance consultancy through which such covers have been purchased.

An FIR copy, invoice, detailed description of the incident and non-traceable certificate issued by the Police would be needed to file the claim.

It is also noticed that the jeweller may or may not have opted for a renewal of the insurance cover in the succeeding years and hence would be hesitant to help you with the claim if the contract has not been renewed in the following year.

Value of jewellery covered

But a gold jewellery entails a lot of elements such as the gold metal per se, making or value addition charges and even taxes. The value of the jewellery covered would differ based on the insurance policy the jeweller has opted for. “Suppose you lose your pair of bangles, then assuming you have paid GST, a value addition of 10-20 percent on the gold value, then you would get the entire product value based on the prevailing gold rate, including the value addition,” says Popley, who has opted for a policy of Future Generali Total Insurance Solutions.

A nominal amount is deducted from the invoice value in other cases.

“The claim will be on only 95 percent of the original product value. The customer will therefore receive only 95 percent of the product value,” mention the terms and conditions of a group cover for jewellers available from Oriental Insurance company.

The free insurance offering from jewellers fills the void left by jewellery insurance covers available for individuals.

Locker rules, too, ensure that a bank doesn’t have to pay for any damage or loss that happens to jewellery stored inside them. If one of the pieces was insured under the free insurance offered by jewellers, then you would be able to safeguard that during the first year of purchase.

It is also worth noting that not many individuals opt for a home insurance with valuables cover and hence, the free insurance offer would look enticing.

But do not ignore other factors of high making charges, purity and reliability of the jeweller in the lure of free insurance coverage. A separate valuable cover would cost you less than Rs 2,000 for a Rs 10 lakh cover, but the making charges could be way higher, especially for big-ticket purchases.