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Jewellery retailers are losing out on insurance claims due to some insurers issuing claimants with vouchers for approved suppliers instead of reimbursing them.

In May the BBC’s website addressed this issue and highlighted the case of Liz Strevens from Aylesbury, Buckinghamshire. Strevens lost her wedding ring at Gatwick Airport. As a replacement, she and her husband Tony purchased a ring that was considerably cheaper than the original, costing £295. They then filed a claim for the original ring through their home insurance, as well as a claim for the new ring. The Strevenses enclosed a receipt for the new ring and pictures of the original.

The Strevenses were then reimbursed for the new ring and received a prepayment card for £220 from their insurer, HSBC, which had to be spent at a specified retailer.

However, the Strevenses felt they were not getting fair value for the original ring, so decided to get a quote from a local jeweller, who said that it would cost £660 to create a replica of the lost piece. HSBC then came back to the couple and said its supplier could do it for £430.

The final solution, according to HSBC, was for the Strevenses to either keep the ring plus £220 in cash or return the replacement and opt for the £430 ring to be made.
This may seem like an unusual set of circumstances but, as Jeremy France, owner of Jeremy France Jewellers in Winchester, points out, this is something that the industry is more than aware of, even if the consumer is not.

“This is huge in our industry,” he said. “What happens is we produce the goods, and often also the insurance valuations for those goods and for additional jewellery owned by the clients. In the event of insured loss, the clients are directed to a middleman who has a list of jewellers that are willing to give a discount to insurers. There is nothing wrong with this in itself, except that clients are pretty much told that this is their only option and that they cannot go to the jewellers of their choice.”

This is acceptable if the client is being offered an option of equal quality. However, as France pointed out, jewellers do not offer a homogenised quality of product.

“On many occasions, the clients receive inferior jewellery as the replacement and, certainly in my experience, the jewellery received can be worth as little as 70% of the original loss,” he said.

In the Strevenses’ case, HSBC told the BBC that it felt it had acted fairly. However, it is the small print of many insurance policies that leaves consumers confused as to what their rights are in these situations, and leaves retailers unable to advise them as to the correct course of action.

“We listen to, and work very closely with, customers on their preferred solution when making a jewellery claim for loss or theft and offer a range of settlement options,” said Justin Van Derpant, general manager, operations, at John Lewis insurance.

John Lewis’s policy states its “contents cover is a ‘new-for-old’ policy”. This means that all items lost or damaged will be replaced with new items or the case equivalent.

On the subject of prepayment vouchers, Van Derpant said: “While vouchers and prepayment cards are an alternative and preferred method for many customers making a jewellery claim, we will also consider cash settlements, subject to the terms and conditions of the policy.”

Unfortunately, although retailers can advise customers of their rights, they cannot get directly involved.

“The insurance ombudsman has come down against the insurers and [in favour of] the clients in pretty much every case taken to them,” said France. “Unfortunately, it is not law and so every single complaint has to be taken up with the ombudsman and the retailer cannot bring the case, so it is up to the client to make this complaint.”

The one thing retailers can do is, when customers come in to purchase high-value jewellery or have something commissioned, advise them that when they come to insure the piece they read the small print carefully. It may be a cliche, but the devil really is in the detail.

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