What to Look For, What Will Be Covered, and How Much Will It Cost?
When your watch collection becomes valuable enough that you couldn’t afford to replace them if they were lost/stolen/damaged, you might start to think about insurance. My first few nice watches were not insured, which ended up being quite a bad decision on my part, as one suffered from a snapped bracelet after several years of wear (with a repair quote higher than the original value of the watch) and another I lost in a misplaced backpack on a drunken night out, back in my irresponsible youth.
In both instances, it took quite a long while before I could afford a replacement. When I made the jump from entry-level luxury brands to my first Omega, I decided to insure the watch immediately. My Seamaster Professional Diver 300M took a long time to save up for, and if something were to happen to the watch I wouldn’t be able to replace it easily. Likewise now that I’ve added an Omega Globemaster to my collection, I wanted the watch to be insured against anything that could possibly happen to it.
As a result I’ve done some research into Australian insurance options available for luxury watches, as well as reading through the fine print in some very dry and dull product disclosure statements to try and understand what’s covered (and more importantly, what’s not covered) by the various policies on the market.
Please note that I am not a financial advisor and the below is my opinion only, based on shopping for insurance policies for my personal collection. That being said, hopefully it will be of some help for those of you thinking about purchasing watch insurance for yourselves.
Route #1. Contents Insurance
Some homeowners may want to opt for Home & Contents Insurance, which insures the building itself as well as your personal possessions within. But for those of you who are renting, or live in an apartment where the strata sinking fund will cover any emergency repairs and maintenance for the common areas, Contents Insurance (sans Home) is the most economical option to insure your personal belongings and watch collection all at once.
Contents Insurance makes the most sense if your watches aren’t the only precious items in your household that might be difficult or expensive to replace. It also might be the best approach if your watches are mostly modern, still in production, and not likely to appreciate a great deal in value or become difficult to source at retail. This is because the insurer will typically try to source a like-for-like replacement, and if that isn’t available, pay out the original insured value of the watch regardless of what it might actually cost to replace at the time of the claim. Patek Philippe and Rolex owners in particular should beware, as these watches can be difficult to source at retail as well as being prone to highly fluctuating secondary market prices.
Two things you’ll need to look for when shopping for Contents Insurance are Accidental Damage cover and Portable Contents cover. Both of these are essential to protect watches, and neither are included by default in most policies. Accidental Damage cover is fairly self-explanatory; if you drop your watch, or an errant swing of the wrist leads it dial-first into a doorframe, it will be covered. Portable Contents cover is necessary to ensure your watches are insured when you wear them outside your home, as typically Contents Insurance only covers items located within the household. Be aware that you will need to specify your watches on your policy and their value, as unspecified portable contents cover is usually capped at $1,000 per item.
This combination of features (accidental damage and portable cover, with a high value on the listed portable items) is fairly rare amongst contents insurers in Australia. I shopped around for policies with an estimated contents value of $20,000 and a portable items value of $16,000 (my two Omegas), and the only insurer willing to offer me a policy was Woolworths Comprehensive Contents Cover, which at time of writing would charge me an annual premium of $1,050 and a $500 excess whenever I made a claim.
Other contents insurance providers deem a high portable-to-residential value ratio to be too much of a risk; if your watches are worth almost as much as your home contents, most insurers will decline to provide you with a policy. This rules out everyone except Woolworths Insurance for hopeless watch geeks like myself, as I absolutely funnel most of my disposable income into wrist-porn rather than home décor, but if your contents value is significantly higher than your watch collection value you might find other vendors willing to offer you a policy as well.
Advantages of Contents Insurance:
- Can insure other personal effects in your house aside from your watches
Disadvantages of Contents Insurance:
- Lengthy application process (you’ll be asked for your address, the type of property, when was it built, what the walls and ceilings are made of, security features, occupant details, etc)
- Need to make sure that both Accidental Damage and Portable Cover are included, and specify the value of your watches
- Isn’t ideal for vintage watches where you need to nominate a specific repairer to maintain originality
- Isn’t ideal for watches that appreciate in value quickly, as the policy won’t usually cover a gap between the insured value and the market value
- Overseas travel typically isn’t included by Portable Cover, so if you plan on travelling with your watch you will need a separate travel insurance policy
Route #2. Specialist Watches & Jewellery Insurance
For those who really just want to focus on insuring their watches, rather than your home and/or other personal effects, there are specialist watch and jewellery insurers. There are three main vendors offering watch insurance in Australia: Q Report, Jewelcover, and Centrestone. Because these policies are designed specifically to insure watches and jewellery, they are much more comprehensive in what they cover than generalised Contents Insurance.
All three of the above vendors cover the following at time of writing: loss (either partial or total), theft, accidental damage, and overseas travel. All of them also offer a choice of repairer in the event your watch is damaged, which can be important for vintage timepieces where you have a trusted watchmaker that will maintain the originality of the piece. Free annual re-evaluations of the watches are also included in all three policies, so that the insured value of your collection remains current with market prices. That being said, are a few key differences between these three vendors to be aware of.
Centrestone’s policy comes with a zero excess (nothing extra to pay when you make a claim), and up to 50% additional cover if the insured value of the watch isn’t sufficient to replace it at the time of claim. So if the watch has appreciated since the last re-evaluation, the insurer will pay up to 50% beyond the insured value to replace the watch. However this comes with one potential catch; Centrestone does not provide cash payouts under any circumstances. Instead they reimburse your nominated jeweller to replace your item. This could be a problem with rare or limited edition watches that are difficult or impossible to replace like-for-like.
Q Report and Jewelcover are essentially two slightly different products from the same company. Both are trading names for Jewellers Loop Pty Ltd, and both are underwritten by Chubb Insurance Australia. Their policies are more comprehensive than Centrestone’s, as they also cover loss via natural disaster or “mysterious disappearance”, which is when the claimant cannot explain how, when or where the item went missing. This would have benefitted me with my alcohol-induced watch loss all those years ago; I certainly couldn’t recall exactly where or when it was misplaced the following morning.
What differentiates Q Report from Jewelcover is the excess in the event of a claim, and the additional cover offered for watches that cost more to replace than their insured value. Q Report has a $100 excess and provides up to 50% additional cover, while Jewelcover has a zero excess and provides up to 25% additional cover. Both of them also offer cash settlements if they are unable to repair or replace the watch, making them superior to Centrestone for insuring rare and difficult to replace timepieces.
I’ve checked all three to see what their premiums would be like to insure my own collection. For $16,000 in watches, at time of writing Q Report will charge an annual premium of $440 plus a one-time setup fee of $126.50, along with their $100 excess if I were to make a claim. Jewelcover also charges $440 per year, with no setup fee and no excess, a trade-off for their reduced 25% additional cover compared with Q Report’s 50%. Centrestone is the least expensive of the bunch by a small margin, with an annual premium of $428.64 and a one-time setup fee of $55, but this should be weighed against their lack of natural disaster and mysterious disappearance cover as well as the potential got-you of their no cash payouts policy.
Advantages of Watch and Jewellery Insurance:
- Much simpler application process than Contents Insurance
- No need to check for optional extras to be added to the policy to provide adequate cover for luxury watches
- Better suited for vintage watches due to a choice of repairer when you make a claim
- Covers watches that appreciate in value quickly, with either 25% additional cover (Jewelcover) or 50% additional cover (Q Report and Centrestone)
- Covers overseas travel
Disadvantages of Watch and Jewellery Insurance:
- Won’t insure anything but the watches or jewellery pieces you nominate, unlike Contents Insurance that will cover all personal effects at your residence
Given all the above, I opted for a policy from Q Report for my own Omegas. Jewelcover would have been perfectly fine as well, as neither watch is likely to gain more than 25% of its purchase price between annual re-evaluations. But there’s always the potential for me to add some rare pieces to the collection down the track, so for peace of mind I opted for the more comprehensive cover of the two. The fee differences are pretty minimal anyway.
Centrestone I cannot recommend due to their “no cash payouts” policy, which limits their ability to cover the loss of rare watches that your nominated jeweller cannot source. The omission of natural disaster and mysterious disappearance cover is a worry, as well.
If you want to insure your contents in addition to your watches, and don’t mind paying much higher premiums and excesses as a result, the only suitable option is Woolworths Comprehensive Contents Cover, underwritten by Hollard Insurance Company. That is unless you have contents worth significantly more than the value of your watches; in that case, make sure whichever contents insurer you nominate includes both portable cover and accidental damage cover, and you’ll be set.
Article first posted on Hailwood Peters