A sharp rise in gold prices has prompted experts to advise UK homeowners to reassess their home insurance policies, ensuring that valuable jewellery is properly protected.
Gold has surged nearly 20% over the past six months, recently hitting record highs. As a result, the value of gold jewellery has significantly increased, raising concerns that many insurance policies may no longer reflect the true replacement costs of these items.
Unexpected Windfalls and Risks
James Constantinou, CEO of Prestige Pawn, highlighted the growing value of gold items with recent customer examples. One client received more than £3,500 for a gold chain they had mistaken for costume jewellery, while another brought in gold teeth worth just over £300.
“Gold continues to be a sought-after asset during times of economic uncertainty,” Constantinou said. “It offers better returns than many savings accounts and can provide a quick source of cash for those facing financial hardship.”
However, Constantinou also warned of an increase in counterfeit gold, noting that many customers are unknowingly misled by fake pieces that can be difficult to distinguish from genuine ones.
With demand rising, pawnbrokers report a notable increase in gold transactions. Gold now represents a significant portion of short-term loans, where borrowers use their items as collateral. According to Constantinou, most customers do repay their loans and retrieve their belongings.
Advice for Sellers
Experts recommend that individuals weigh their gold before visiting jewellers and research current market rates to ensure fair valuations. They also caution against selling through online platforms without adequate insurance, especially when items are being shipped.
Insurance Gaps Could Leave Homeowners Exposed
While most home insurance policies include coverage for jewellery and valuables, they often impose a “single item limit” — the maximum amount payable for any individual item lost, stolen, or damaged. Data from financial information provider Defaqto reveals that 65% of home insurance products cap this limit between £1,500 and £2,500.
Angela Pilley, a home insurance expert at Defaqto, warns that failure to inform insurers of an item’s updated value could result in significantly reduced payouts. “If a gold ring now worth £3,000 is only covered up to the single item limit, and the insurer hasn’t been notified, the policy won’t cover the full value,” she said.
To avoid such shortfalls, Pilley recommends that homeowners have high-value jewellery professionally appraised on a regular basis and update their insurer with any valuation changes. Insurance policies generally do not adjust automatically for inflation or market price fluctuations. Without such updates, homeowners risk financial losses if valuable items are stolen, lost, or damaged.
Takeaway for Homeowners
As gold prices continue to climb, experts stress the importance of reviewing home insurance policies to ensure valuable items are accurately declared and adequately insured. Failing to do so could leave homeowners underinsured and out of pocket should the unexpected occur.
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