Last Word: All That Glitters
Insurance gleams as a way to protect borrowed jewelry worn by celebrities on the red carpet.
While this year's Oscars red carpet was abuzz with speculation about who would take home the coveted awards, it was also brimming with celebrities donning Versace, Valentino, Vera Wang and other designer wears.
But no ensemble is complete without the dazzle of what often racks up to be multimillion dollars in jewels.
Before those borrowed gems are placed on a celebrity's finger or around their necks, however, one word should immediately spring to mind: Insurance, said Donald Soss, vice president and private wealth executive at Fireman's Fund Insurance Co.
He said only a handful of companies currently cover items not owned by an insured. "It's difficult and expensive to buy insurance for something you'll have for just one night."
But Fireman's Fund is unique, Soss added. "We provide a provision within our policy that allows customers to do that without even telling us." Jewelry is automatically covered under its Care and Custody provision, "so if we have a customer with $1 million of scheduled itemized jewelry, they get that full limit for 90 days for anything that's borrowed, loaned or on consignment."
The company, he said, provides in its policy "all the provisions and covers the jewelry like it's your own, with no deductible."
This year's awards events glistened with costly, one-of-a-kind baubles such as a Harry Winston vintage 1967 diamond and yellow gold bracelet and diamond earrings worn by actress Jessica Chastain at the Oscars and a reported $31 million, 381-carat diamond necklace adorned singer Carrie Underwood at the Grammy Awards.
Other commonly borrowed pieces include watches, brooches and even tiaras. But, Soss noted, earrings are often the most likely to bring about a claim.
Aside from loss, jewelry may be misplaced or diamonds or other precious gems may fall out of a setting, he said. "Mysterious disappearance, however, is generally the most common type of loss we see."
Janece White, vice president and jewelry underwriting specialist for Chubb Group of Insurance Cos., said that unless a celebrity asks what is required of them, "they might not have the right insurance" for borrowed jewels. "Sometimes it's jewelers themselves that will provide the insurance, but that's rare and expensive."
Jeweler's block-- coverage that protects a jeweler's entire inventory-- often doesn't provide coverage for loaned or borrowed pieces, she said. "So it's up to the individual borrowing the jewelry to find out if they have coverage. In most instances and in most policies, they do not."
The transfer of borrowed bling is an important part of the underwriting process, White noted. Insurers need to know when a celebrity is picking up the jewelry, how the transfer will take place, where the adornment will be kept after it's taken off, and when and in what manner it will be returned.
Chubb customers with existing jewelry coverage can receive up to 25% of their itemized jewelry schedule, up to $100,000, White said. "When borrowing more than that, however, if they contact their agent and us, and if they're a customer in good standing, we will try to find a way to help them. That's something we did with a number of customers during the Oscars."
Fireman's Fund offers different rate structures for borrowed jewels. For instance, individuals lacking a safe to store the pieces face higher rates, Soss said. "However, customers with either a 750-pound or UL-approved safe with a catch receive decreased rates."
Often, White noted, jewelers' carriers require celebrities to either show proof of sufficient "valuable articles coverage" or sign an agreement that assumes financial responsibility for loss, damage and theft out of his or her own pocket. Several years ago, a court ruling required a celebrity to pay $100,000 out of pocket for borrowed jewelry that went missing after a public appearance.
The first step in properly insuring borrowed baubles, she said, is having a good insurance carrier. "Secondly, celebrities need to have a conversation with the jeweler to find out what their responsibilities are. Then they need to make sure to give their agent as much information as possible about who is responsible for the jewelry, its value and how long the pieces will be borrowed."
By Lori Chordas, senior associate editor, Best's Review: Lori.Chordas@ambest.com
