The Ultimate Guide to Watch Insurance
19th Apr 2022
Luxury watches are more than an elite style statement; they are an investment worth protecting. That is why companies offer watch insurance that protects investments on watches and other high-value and custom jewelry. Generally, watch insurance pays for repairs and replacement if the covered watch is damaged, lost, or stolen. Since watches like those by Patek Philippe are high-priced luxury items, it makes sense to protect them with watch insurance.
There are many watch insurance policy options on the market, so it is essential to know what each policy offers to get the best option for your timepiece. There is a lot to consider, from worldwide coverage to appraisals and $0 deductibles when purchasing watch insurance. Whether you are just starting to invest in and collect watches or you already have an expansive collection, protecting your purchase with watch insurance is necessary for peace of mind and financial security.
Watch Insurance Explained
Before you can pick the best insurance policy for your watch, you need to know what coverage options are available.
The quoting process
The quote is an estimate of the price of your watch insurance. Many watch insurers use a convenient online quote calculator. They use information about your watch to estimate the cost of your policy.
You may need to provide photos of your watch, the value of the watch, proof of purchase, and your personal information for a quote. You’ll also need to select the level of coverage for your policy. Some companies require more information than others for a watch insurance quote, and you may need to have your watch appraised to receive a quote.
The appraisal process
An appraisal is a third-party valuation of your collection. Some watch insurance companies require appraisals for your policy, while others only require appraisals for high-value collections.
If you’re unsure of your watch’s value, you may want to get it appraised before purchasing insurance. This way, you won’t make the mistake of buying a plan that over- or under-insures your watch. For high-value, rare, or vintage watch collections, you may need to have your watches re-appraised every five years to adjust your policy for appreciation and inflation. In some cases, you may not need an appraisal. A proof of purchase or valuation letter is sometimes sufficient to insure luxury watches purchased in the last 12 months.
Coverage and coverage limits
Most watch insurance policies cover theft, damage, and loss. Each policy has a coverage limit. An insurance policy’s coverage limit is the maximum amount it will pay when a covered loss occurs. While most insurance companies offer 100% of the appraisal value in coverage, some insurance companies with watch-specific insurance policies offer coverage limits up to 125% of the watch’s value. The coverage beyond the watch’s value covers its potential appreciation. This is important for those collecting watches primarily as an investment.
This is why it is essential to accurately value your watch during the insurance application process. Overvaluing it causes you to buy more insurance than is necessary because the premium is tied to the watch’s value and the coverage limit you choose. Undervaluing it is also detrimental because you may not recover its actual value if you need to file a claim.
Coverage exclusions
Your coverage may also be subject to coverage exclusions. Coverage exclusion is a provision in your policy that disqualifies your collection in the case of specific acts, damages, or locations. For example, a policy may have a normal wear and tear exclusion that disqualifies coverage if the damage results from normal wear over time.
Other coverage exclusions include damage while in military action, intentional acts, and pest damage. There are also coverage exclusions based on your location when damage or loss occurs. If your insurance policy does not have worldwide coverage, your watch is not protected abroad. If you plan to don a Cartier watch during your travels, choose a policy with worldwide coverage to protect your watch in any location. Scrutinize all coverage exclusions so you’re not surprised when filing a claim.
Premiums
The premium is the cost of maintaining your coverage. Insurance premiums may be one annual payment or have the option of smaller monthly payments. Yearly premiums usually range from 1% to 2% of your collection’s value. A $10,000 watch has a premium of $100 to $200 annually.
Your premium is determined by coverage limits, deductibles, and personal information. Collect quotes from multiple companies to find the lowest premium for the coverage you want but ensure that price isn’t the only factor in your selection. Friendly and prompt customer service is also essential when filing and processing a claim.
Deductibles
A deductible is an amount you have to pay before receiving a coverage payout. If your deductible is $500 and you lose your watch, you have to pay $500 before your insurance policy pays the remainder, up to your coverage limit. Most watch insurers have $0 deductible options, and most cap their deductible around $1,000. However, choosing a policy with a higher deductible can reduce your premium.
Claims process
You’ll report covered damages or loss through the claims process. Once you submit a claim, the insurance company will pay for the repair or replacement of your watch. Check each company’s claim process for specific features that suit your lifestyle; some watch insurers offer online claim forms or agents to help you through the process. When making a claim, you’ll typically need to provide documentation that proves watch ownership, such as an appraisal document or proof of purchase. You may also need to complete a police report in case of theft.
Watch Insurance Versus Special Homeowner’s Insurance
Homeowner’s insurance includes coverage for precious items, including luxury watches. However, a basic homeowner’s insurance policy typically only offers watch coverage up to $1,500. Unfortunately, this coverage amount is inadequate for most luxury watches. Custom, rare, or vintage watches can cost hundreds of thousands of dollars. Even the best starter watches, such as the Rolex Women’s Black Stainless Steel Datejust, can cost several thousand dollars.
Your homeowner’s or renter’s insurance policy may allow you to raise the coverage limit of precious items up to $5,000, which are inadequate for higher-valued collections. Floater insurance policies are another option. Floater insurance covers easily movable personal property like watches. Each floater insurance policy offers full value coverage for the loss, theft, or damage of one item. If you own more than one watch, you need to get a floater policy for each one.
Floater policies also require a professional appraisal for coverage. You will need to have your watches reappraised every few years to ensure the valuations are current and you have enough coverage in your policy. You can purchase a floater policy alongside your homeowner’s or renter’s insurance.
Your Watch Warranty May Not Be Enough
New watches often come with the option of warranty coverage. Even if you decide to buy a lifetime warranty, you should still consider watch insurance because watch warranties do not cover loss or theft. There are two general types of warranties available: manufacturer’s warranties and in-house warranties. To qualify for a manufacturer’s warranty, you need to buy the watch from an authorized dealer. Manufacturer’s warranties cover internal components, such as the watch’s movement, but do not cover bracelets, bands, clasps, buckles, crowns, or cases.
An in-house warranty is provided by the dealer rather than the watchmaking company. At Luxury of Watches, we offer a 5-year in-house warranty covering the movement and other internal components for new and pre-owned timepieces. However, this warranty does not cover aftermarket additions, such as diamond settings. While a warranty is crucial to protect your luxury watch purchase, you also need to buy watch insurance that covers watches of any age, including pre-owned watches. Each protects your watch from different risks. Having insurance offers coverage beyond the warranty’s expiration date. Your watch warranty protects against faulty materials and workmanship, while insurance protects against loss, theft, and other damage in the future.
Who Needs Watch Insurance?
Watch collectors with large amounts of money invested are at more financial risk and should buy watch insurance to protect their investment. The value of their collection is worth far more than their renter’s or homeowner’s policies will cover. The cost of watch insurance is a small fraction of their watch’s value, making it an affordable way to have financial security. Also, watches expected to see significant appreciation, like watches with stainless steel cases and bands, should be insured. Watches valued at less than your homeowner’s insurance coverage for precious items do not need their own watch insurance.
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Ways to Protect Your Watch
Watch insurance is necessary to protect your financial investment and provide peace of mind. Where you buy your watch, keeping documentation of your purchase, and how you store your watch can further protect your investment.
Safely store your collection.
A collection’s high value makes it worthwhile to store them in a safe or a bank deposit box. A bank deposit box is an excellent option for someone who collects rare or vintage watches or individuals who travel often and desire more security. You can rent a safety deposit box from your bank for an annual fee.
An at-home safe is a good option for those who like to swap out the watch they wear frequently but still want added protection from burglary and fire. Safes come with mechanical or digital locks and bolt into a home’s foundation to ensure a thief can not pick it up and leave. Since safes protect against burglary, some insurance companies offer reduced premiums for storing watches in a safe.
Keep your receipts.
It is essential to keep each watch’s proof of purchase and ownership documents because some insurance companies require it for your policy. These are also necessary for warranty purposes and resale opportunities.
Buy watches from reputable stores.
Buying your new or used watch from an authorized dealer ensures you’re getting an authentic timepiece. You don’t want to spend thousands on a fake watch. Choose a watch dealer with a high reputation that offers certificates of authenticity with your purchase. Luxury of Watches has been in the watch business for 25 years and is accredited by the Better Business Bureau. We also provide a Certificate of Authenticity with all our watches, from Rolex watches for men to Cartier models for women.
How to Choose a Watch Insurer
There are several crucial factors to consider when choosing an insurance provider to protect your luxury watch. While premiums, deductibles, coverage limits, and policy exceptions take priority in deciding your insurer, you should also consider customer service. Good watch insurance customer service should be eager to help. They need to have a deep understanding of watches and are knowledgeable about watch markets so they can help if you need to replace an investment timepiece.
Read reviews online and ask friends about their experience with various companies to understand each company’s knowledge of watches and customer service experience. Ask for referrals and see which companies have discounts available to you. You should also consider whether the insurance app or website is user-friendly. Ensure that your chosen insurer has a simple policy application process and allows you to add extra watches to your policy. Check if your insurance provider offers a phone app or an online calculator to get a fast quote.
Grow Your Collection with Luxury of Watches
Owning a luxury watch also means protecting your investment. Theft, loss, or damage to your watch can happen anywhere. If you’re in the market for a new watch, choose a reputable store and purchase watch insurance.
Luxury of Watches sells new watches in original factory condition with serial numbers intact to ensure you’re buying authentic pieces. Our pre-owned watches are all serviced and in mint condition, so you can wear your watch with pride. We offer premium watch brands like Rolex, Breitling, and more at discount prices. Contact us today if you are looking to add to your watch collection and want more information about our offerings.
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