Jewelry Insurance

I’ve been wanting to write about this topic for a while.  I often get asked why I don’t have insurance when I refuse to set a customer’s stone because  - as I explain – I’m not insured for it.
The hard truth is I can’t afford it, and most people I know on 47th Street can’t either.  Jewelry stores have insurance because (I think) they’re required, but this does not apply to gemstone dealers and small shops that don’t have retail traffic. 
Let me walk you through an insurance quote that I got when I called a broker to obtain insurance for my jewelry business:
1.      Insurance amount: $50,000
2.      Deductible: $5,000
3.      Carrying insurance (that’s when you travel with your stuff) is included but has the same deductible.
4.      Annual premium: $5000 (so 10% of the insured value)
Insurance is calculated at wholesale replacement cost, which can be high at times, but regardless of that, I confess that don’t own a single piece of finished jewelry and not a single gem that can be valued at $5,000 replacement cost.  So no single item I own is insured.  When I carry items back and forth, what I have in my purse never exceeds $5,000 – in fact it is mostly far less because I also don’t like risk.  So if I get robbed I will get nothing.  I don’t do a lot of craft shows, and I don’t bring the expensive stuff.  However you look at it, unless someone breaks into my house and takes everything (everything that’s not in the bank safe!), I’m not covered.  And that non-coverage costs me $5,000 every year!
It gets worse.  Gem dealers are required to make an inventory sheet every time they travel.  If their inventory changes a lot (and it does), then they have to re-tabulate everything every time.  Since they take literally thousands of stones with them, and parcels lose and gain weight from office, online, and mail order sales constantly; and they travel often, they would need to hire someone part or full time just to keep tabs on what items are where, how much they weigh, cost, etc.  This doesn’t pay. 
Why is insurance so expensive?  Essentially it’s high risk insurance because of the travelling inventory, and thieves apparently are under the mistaken impression that gemstones are worth stealing.  If they only knew!  It’s incredibly hard to sell a colored stone at a good value (given the option thieves have, anyway – it’s not like you can open a store with stolen goods), and gem dealers offer pennies on lots that show up in suspicious circumstances, displayed by a seller they don’t know.  Gem dealers know very well whom to stay away from, and they do!  Aside from the legal risk they take buying stolen goods, the gems may turn out to be fakes or of poor value, and even an experienced gem dealer cannot always tell just by looking.  You need laboratory equipment for that.
Probably the only thing worth stealing is gold (which I don’t stock – just in case a potential thief is reading this!) because it can just be melted down.  But these days even refineries are required to hold on to gold they bought for at least a day, in case there’s a claim.  Diamonds can be worth something to a thief but he (or she, lest I be thought of as claiming that women don’t steal) will only get a small fraction of the retail, or even wholesale, value, for much the same reason as with colored stones.  But it is easier to tell a fake, and the market value of diamonds higher; and those are about the only two reasons to go for diamonds instead.
Be that as it may, the theft risk is what makes the insurance costs so impossible.  Add to that the chance of insurance fraud: all you need are some fake invoices for high replacement costs, and you’re in business.  (Not that I’ve ever seen it done, but it doesn’t seem very hard.)
In short, it is actually understandable why insurance costs are so high.  But the downside remains: it leaves everyone in the business vulnerable.