Jewelers block insurance is essential for a jeweler to operate his or her business. Without it, the risk of doing business can be prohibitive for jewelry companies. But even as valuable as it is, jewelers block insurance can also be limiting when it comes to small parcel shipping clauses included in policy wording. Complementing your policy with additional shipping insurance is a sound strategy for better protecting your business and adding flexibility to your plan. The following reasons demonstrate why this is the case.
What Is Jewelers Block Insurance?
Jewelers block insurance is an extension of a jeweler's standard insurance policy which covers expensive goods sold by the business. The policy originated at Lloyds of London in the late 1880s from the combined efforts of a diamond merchant clerk and his friend, a leading underwriter for the company.
The policy is designed to be an "all risk" coverage, meaning the insurer is required to specify anything that is not covered. Risk protection typically includes items like fire as well as events like robbery, shoplifting, grab and run, trick loss, theft by substitution, and accidental damage.
Jewelers block will also contain certain exclusions. These exclusions often include employee dishonesty, damage to goods being worked on, and unexplained loss. In some cases, these exclusions can be purchased back for a price.
Since jeweler's block insurance will cover items that are very expensive, the policies will come with many stipulations on the way business is conducted and how the covered product is handled and stored.
Carrier & Value Limits
Most jeweler's block policies include an insurance limit for shipping jewelry and precious goods. Almost all policies come with coverage for USPS only up to $25,000 for Priority Express Mail and $100,000 for Registered Mail. For companies that want to ship via private carriers like FedEx, UPS or DHL, the annual exposure must be declared, and an additional premium will apply.
The main reason for this is that although the tracking and reliability of USPS is not up to par with private carriers, there are many more instances of theft from carrier employees with private carriers.
Even if private carrier is added, common limits are $25,000 per package with $1,000 deductible.
If a client is requesting UPS or FedEx, a jeweler can simply insure those packages through Cabrella via their online dashboard.
While that works for many precious goods, consider what happens if you need to ship a ring valued at $35,000. A ring can't be split into two separate packages to minimize the risk you would incur. In this scenario, the jeweler would have to ask his or her broker for an additional $10,000 of coverage for a particular shipment. If the broker is unavailable, there may be delays that can frustrate customers. Further, many jewelers block policies are serviced and written by insurance markets in London – even if the local broker is available, the carrier in London may not be, adding more complications.
The alternative and better solution would be to purchase an insurance policy to cover the excess amount. For example, Cabrella offers options that will cover a single package for up to $150,000, solving the coverage issue on a $35,000 ring and many other items. The client can simply log onto his or her online dashboard and book the additional $10,000 in coverage in a few steps.
There are people all over the world that are just waiting to be your customer. But certain jeweler's block policies may not allow you to conduct business with all of them. Most policies will include coverage for shipments within the United States, its territories and possessions, and Canada. Many policies offer no international shipments at all. That is no way to do business in today's global economy.
Cabrella has very few international restrictions and provides international parcel shipping insurance that allows you to ship jewels and other highly valuable items globally. This ability opens a broader market for your goods. For a jeweler with policy provisions such as these, they can simply insure the international shipments with Cabrella separately. This is a perfect complementary program for the jeweler.
The increased market can even change the way you currently do business. Shockingly, it is estimated that 96% of the world's consumers live outside of the United States. Expanding your business model to include those potential customers can vastly increase growth and future opportunities.
If that wasn’t enough, there are other limitations contained in the wording and fine print of most jewelers block insurance policies.
One limitation is that although the policies may include shipping, the services included are almost always limited to “Overnight Only”. As you may know, overnight shipping prices are much higher than the alternatives such as 2nd Day, 3rd Day & Ground. Many times, if the shipment is being shipped locally, you can send the package Ground and it will arrive at the destination next day anyways. Cabrella allows all services which can help you create a more flexible shipping program for your clients. Many jewelers will find that shipping 2nd day or ground and paying for the insurance could ultimately be less expensive than shipping overnight and having the insurance included in the policy.
A second limitation is that the policy will require boxes and not allow envelopes. Because Cabrella can customize and design parameters, they have been able to obtain approval from underwriters on certain accounts to allow those clients to ship and insure with envelopes – thus reducing their shipping costs dramatically.
A third clause that is commonly found in jeweler’s block policies is the exclusion of certain zip codes such as 10036 or 90013. Shipments may be covered – but not to those zip codes. What can a jeweler do if they need to ship to these areas? With Cabrella, they can simply insure those packages on demand using their online dashboard.
A fourth area where Cabrella helps a lot of clients is on parcel limitations to the same address. Many jewelers block policies will contain a clause allowing “only one package to one address in one day”. Effectively, this means that if you had a few boxes that you wanted to send to a customer, you would need to send each one on a different day. With Cabrella, we remove that limitation and allow you to get the entire order out to your customer on the same day.
The statements above represent only some exclusions and limitations – many times, jewelers will find that there even more. Cabrella is the perfect complement to a jeweler’s block policy by providing them an avenue to lift these exclusions and limitations and continue to focus on their business.
The Cost of Filing a Claim
When disaster strikes, the last thing you want to worry about is how much of a deductible you need to cover the loss of the item. Yet with many jeweler's block policies that is exactly what happens.
It is not uncommon to have a $10,000 deductible that needs to be satisfied before lost or damaged items can be replaced. This means that replacing an order lost in transit could cost you significant out of pocket expenses.
The expense of the deductible could put an undue burden on your business, especially if you need to replace the item to complete the sales transaction.
Filing claims is a time-consuming hassle. However, using certain third-party insurance companies can shorten the process. Cabrella offers online shipping insurance claim filing that is automated for a majority of the process.
Further, many jewelers don’t realize that the policy valuation clause on a jeweler’s block policy is usually based on cost. Meaning if the cost of a ring was $5,000 and the jeweler sells that ring for $10,000 and the ring is lost in transit, the jeweler will receive $5,000 and not the $10,000 that he sold the item for. Add a $2,500 deductible to that and now, instead of making $5,000 on the sale, the loss costs $2,500 not to mention all the time and effort put into the process.
With Cabrella, the policy pays claims based on invoice value without deductibles. The same package described above, if insured with Cabrella, would have a $10,000 settlement.
The effect of a loss on your Jewelers Block policy
If you are a jeweler and have insurance, you have most likely heard of a “No Claims Bonus”. For those of you that don’t know about this, a No Claims Bonus is a discount on the premium, usually 10%, when a client is claim free for a particular year. Further, policies have credits and discounts built in based on the loss history and profitability of the account over time.
Although store robberies occur, the most frequent types of losses a jeweler will experience are shipping losses and losses that involve traveling with merchandise.
As such, if you do have shipping coverage on your jeweler’s block policy, there is a high chance that one shipping loss can end up costing you a lot more than you thought by losing the No Claims Bonus and also losing loss free discounts and credits.
Many jewelers understand this and want to keep their premiums low. In order to accomplish this, they will usually separate out the shipping insurance from their policy and simply insure with a 3rd party like Cabrella. That way, if there is a shipping loss, the rest of the policy is not affected, and premiums remain low and competitive.