Sky high to rock bottom in months…what's going on in the watch market? Watch insurance explained.

The word COVID will live with us forever and as much as I detest using the word or even referring to that period it had a huge effect on our lives.

Noticeably the period when everyone was at home bored with cash burning a hole in their pockets people went a little bit mad spending on stuff they actually wanted.

I heard you say:

‘Life’s too short’

‘If not now, then when?’

‘Sod it. Why not?’

Emotions took over, cash came out to play and sellers of luxury goods from yachts to Hermes handbags and Patek Philippe watches kept their doors propped open all hours of the day welcoming in this unexpected business. Order booked at shipyards filled up in what felt like seconds, Rolex authorised dealers told us all the waitlist for a steel Daytona is now 7 years not 2, and 5980R’s went from just over list all the way up to £300,000 but then….

Well, what actually happened?

We went from this huge wave of activity, even salaries at record high on to redundancies, people spending on luxury goods to closing their personal cheque books staring at that big ugly word I N F L A T I O N.

BoE jumped on the wagon, decided that even though they’d already increased base rate with zero effect they will simply continue doing more of that just in case it helps bring inflation back down. Has anyone seen that happen yet?

Anyway, I’m waffling but this is all a very important lead up to how you should manage your collection of luxury goods….watches, art, jewellery, handbags, sneakers…the lot.

My first bit of advice is, be sensible and keep an eye on things. Markets fluctuate therefore what you own is likely to be, now underinsured, prior to covid over insured. 

Secondly, do you know the difference between market value and purchase price? You need to. Let me explain.

I have lost count of the number of calls our team have had with clients new and existing explaining how to manage the values of their collection. Eg. I paid X and now it's worth Y, what do I do? 

If you’re lucky enough to know an AD that takes a brown paper envelope to get you that 5980R or Daytona then listen in. You’re one lucky person. You paid the list price for your watch or even a Hermes Birkin and now it's worth more. You love it so you haven’t cashed out meaning you need to insure it accurately.

I know you have already jumped on Chrono24 to see what your watches are selling for, well that is what you need to insure it for. Less a little bit to make an allowance for the inflated USA market.

Why?

Yes you’ll pay more for insurance but you will get market value back for your lost item not purchase price. And no, there's nothing wrong with this. Insurers encourage you to insure accurately and to do so you must engage with a valuer that your insurer accepts, pass this valuation on to your broker and ask them to update your policy then sit back and breathe a sigh of relief you’re properly insured. That AD you’re in bed with will knock up a valuation for you free of charge.

What if you don't?

Two things:

1. 
   You'll only get the purchase price which is unlikely to be enough to replace the watch if the market value is higher
2. Your insurer may penalise you applying the Average Clause which means your claim settlement will be reduced by the percentage you have intentionally under insured for so you'll get even less than the purchase price. 

Have I convinced you yet?

One prediction for you now….

When you do pass the valuation to your broker your insurer, most likely a home insurer, won't like the new values and are likely to ask you to take your business elsewhere. A true HNW insurer won't but are you insured with a true HNW insurer?

When this happens, give us a call, we’ll help you insure your collections accurately.

The future you will thank you for taking me up on my advice!

Happy ownership of all those lovely items you’ve spent your hard earned cash on.

Samuel Cise

Managing Director

Saxon Insurance Brokers

0203 384 0303