INSURANCE SOLUTION FOR JEWELLERS

In competitive scenario the insurers are going for fresh image by introducing need-based products. The business activity of jewelers and diamond processors is singular from other traders and thus require an insurance wrap-up that can provide solution to the hazards to which this business activity is exposed in its normal trade. The stock and stock in trade is dominant factor in deciding the value at risk and the nature of risk is also different. The standard fire and burglary policies do not offer the preferred risk protection solution in their customary policy-plan to jewelers and diamond traders. The stockpile of these traders is of very high value and passes so many hands before a deal is affected. This trade is most susceptible to loss of property even by criminal acts & is prime target of criminals despite the most sophisticated and ingenious protection measures. It may be kept in display windows to attract customers and to publish the products. It may be kept in bank or even in private lockers outside the business premises for safety and store purpose or it may remain with goldsmiths or Angadias for specific purposes. The stock may also remain in possession of brokers, partners or employees outside the business location and in these circumstances the named location policies does not provide the complete insurance solution to the risks of these traders. These high value products are also prone to infidelity risks.

In order to meet the specific need of the jewelers the insurers offer a trade-specific insurance solution to these traders known as “JEWELERS-BLOCK INSURANCE”. This package is intended to cover the stock and stock in trade of jewelers kept in the premises, against accidental loss or damage. A separate provision is also made for stock kept in safe deposit lockers or in the custody of the insured, his employee or other persons not in the regular employment of the insured. A further provision is also made for goods in transit by Registered Post Parcels or Airfreight or with licensed Angadia. A separate amount is also indicated in respect of stocks on display windows in the insured premises.

It is to be noted that all stocks in the premises of the insured or their agents are to be secured in a burglar proof locked safe at night and at all times outside the business hours. A warranty to this effect must be attached with the policy and this warranty cannot be waived even on payment of extra premium or by loading the premium rates. Where the value at risk is heavy the PML must be ascertained and insured must be advised to keep the stock in different burglar proof safe with limited value as calculated to arrive said PML. The policy doesn’t cover the theft or dishonesty or any attempt there at by any member of the insured’s family or employees or any person lawfully on the premises, or where such loss or damage has been expedited or in anyway assisted or brought by any inmate of such household or business staff as principal or accessory or any customer or broker’s customer in respect of property entrusted to them by the insured, his servants or agents.

SCOPE OF THE COVER

Jewelers Block is a package cover, which comprehensively covers various kinds of risks. There are 4 sections in the policy to provide wider solutions to different perils to which this trade is exposed:

Section     I	Section    II	Section   III	Section IV
Covers Jewellers merchandise and cash on premises against Fire, Lightning, Explosion, Theft, Burglary, Hold-up, Robbery, Riot, Strike and Malicious Damage Act.	Covers on all risk bases the property entrusted with partners, employees, brokers, and goldsmiths The risk   of infidelity is also covered.	Covers jewels and other valuable stocks whilst in transit through registered post parcel, airfreight or Angadia due to accident or misfortune or infidelity.	Covers furniture fixtures and fittings against the risk of fire and allied perils and burglary risk.

The risk may be extended to cover the Flood, Storm, Inundation, Storm, cyclone, Tempest, Typhoon, Hurricane, Tornado or other similar convulsions if nature by charging additional premium.

Section I covers jewelry, gold & silver ornaments, pearls, all merchandise and materials usual to the conduct of insured’s business including diamonds & other precious and semi precious stones and also cash & currency notes. The trade stock is covered whilst the same is contained in specified business premises or in private or other lockers specified in the policy. Insured has to specifically declare:

SUB SECTION ‘A’	SUB SECTION ‘B’
1.     Property in display windows. 2.     Property on specified premises 3.     Property in locked safe in premises. 4.     Property in lockers elsewhere. 5.     Property elsewhere in premises	6.     Cash & currency notes in Bank lockers. 7.     Cash & currency notes in private lockers.

The contents covered in this section provide protection from the criminal activities but all criminal acts do not find the desired protection clause in the policy wordings. Burglary covered in the policy is not defined in Indian Penal code but this cover well defines burglary as theft following upon forcible and violent entry into the premises or exit there from. The definition of burglary emphasizes the need to appreciate undoubtedly what is theft. The Indian Penal code section 378 defines theft as ‘whoever intending to take dishonestly any movable property out of the possession of any person without that person’s consent, moves that property in order to such taking, is said to commit theft.’ And when for the purpose of such taking entry or exit is by both force & violence it turns into Burglary. There are certain exclusively dissimilar form of criminal acts relating to property that also under the IPC are considered to be theft and these acts are not expressly mentioned under the Jewelers’ block policy as being covered under the policy. One of such acts is Cheating.

Section II covers the above-specified risks on ALL-RISK basis when the insured contents are carried and conveyed outside the specified premises for the purpose of trade. Limit for carrying by partners, employees and other persons are agreed at the time of inception of the risk and is specifically stated in the schedule of the cover.

Section III covers transit of insured trade stock within India by Airfreight, Angadia and RPP unless agreed otherwise. The values to be declared to Air Carriers and excess against losses by Angadia’s are agreed at the time of inception of risk.

Section IV includes computers and other specific equipments of the insured but the risk is restricted to fire and allied perils and burglary risks. Electrical and Mechanical breakdown risks are not covered and if the insured wishes to cover such risks for its equipments he has to purchase separate machinery breakdown or electronic equipment cover for such risks.

 As this is a non-tariff business the rates depend upon the market forces and the business portfolio of the client. Moral hazard of the client is very important in this type of insurance. For rating purpose the risks are generally divided into three categories:

CLASS	FEATURES
I	Watchman employed on 24 hours basis specifically by the insured for all the insured premises.
II	Common Watchman for the premises or night watchman for the premises.
III	All types of other risks

Generally the Insurers charge the following rates to cover the risks of jewelers and diamond traders:

SEC.	JEWELLERS	DIAMOND TRADERS
I	0.75%	0.15 to 0.18%
II	Employee-0.50% Agent- 0.50%	Employee-0.30% Agent- 1.00%
III	1.00%	2.00%
IV	0.10%	0.10%

Insurers generally do not cover the Registered Post Parcels in section 3 of this package policy. The transit risk is limited to any one accident and any one-year limits that is generally 10% of sum insured or Rs. 5 lakhs. Even the insured prefers specific marine covers against their sending by post or air freight that are available in non- tariff marine market at much cheaper rates as per INCO terms and specific sales contract.

To encourage the special protective device or special security measures insurers offer certain discounts.

This package is exclusive but it does not protect the insured against any consequential loss or legal liability of any description. Its wider protection does not mean that it also covers the stock in trade whilst at any public exhibition promoted or assisted by any public authority or trade association. To cover Exhibition risks the insurers generally charge extra rates on time basis @ 0.15% per month or part thereof. If the exhibition risk is for less than a month the insurers generally charge 0.10% on selected sum insured by issuing a separate exhibition cover.

Cracking or scratching or breakage of lens or glass or to china marbles and other articles of brittle or fragile nature are also not indemnified against this insurance solution unless such loss or damage arises from accident to vessel, train, vehicles or aircraft by which such property is conveyed by the insured.

The utmost good faith and disclosure principles are to be observed on and throughout the policy period by the insured. If the insured shall cause any material alteration on the premises or anything is done whereby the risk is increased the same must be notified to the insurers otherwise the risk becomes void at the option of the insurers. Theft of disappearance of the property from road vehicles owned by or under the control of the insured, his partners of his employees or agents when such vehicles are left unattended is not covered in the policy.

Like other insurance products the insurable interest is an important feature of the cover and this interest is required to be present in the contents insured both at the time of inception of the risk as well as at the time of unforeseen & sudden occurrence covered in the policy. The goods held in trust if required must be specifically disclosed while taking the cover in order to avoid any disputes at the time of settlement of the claim.

The jewelry business is also witnessing fast changes in the trade and its practices. The exports have become integral part of the jewelry trade and their transits as well as the protection of the interest of the sellers once the consignment is not cleared at foreign countries are the protection, which are also sought by the traders in the package solutions. Even the liability solutions can be incorporated in the cover. In this technology age one slot may be kept in the package cover to indemnify the insured against the electrical breakdown of computers, which are now used extensively by the jewelers. Covers for laptops, mobiles, fixed glasses & sanitary fittings may also be incorporated to widen the scope of the cover. Insurers receptive to these changing products need may really bring a pearl-product for jewelers.

Vinay Verma,