Many jewellery stores on risky ground over insurance

Posted May 10, 2011 | By Lorna Goodyer

Jewellery stores are leaving themselves open to risk by not taking out insurance for “business interruption”, it has emerged.

While standard insurance policies cover material damage such as product, fixtures and fittings, as well as office equipment, many do not compensate jewellers for loss of earnings if they are forced to close their store for a period of time – even if it is due to circumstances beyond their control, such as a nearby fire that has affected the area but not their store directly.

If a retailer was forced to close for a period of time, business interruption insurance coverage would allow them to claim the net profit plus continuing operating expenses during that time.

Michael Ballinger, senior general adjuster, global technical services for Crawford & Company, said he was surprised that more jewellers didn’t have this type of coverage. “Most other commercial businesses recognise the importance of that coverage. At the end of the day, material damage is not going to change – it is what it is. But business interruption can have a long tail to it. [Business interruption insurance] means you can keep getting that revenue, you can keep paying off that mortgage on your home.”

Financial compensation for the time a store is closed will also allows jewellers to keep paying valuable members of staff – such as a gemmologist or good salesperson – that they would be in danger of losing completely if they were unable to pay them for the time the store was closed.

“If you don’t have any of that revenue coming in anymore you might have to turn around to your employee and say, ‘I’m going to have to lay you off and when I get things back up and running again I’ll give you a call and see where you’re at’,” says Ballinger.