Thus, the jewelers block policy is, first and foremost, a practical policy, which is reflected in its evolution and the care with which it is written and administered. Many, if not most, jewelry stores in cities across America are not large corporate entities but, rather, family owned and operated. As a result, this form of insurance demonstrates the responsiveness, creativity and resourcefulness of the specialty insurance marketplace.

Like other block policies, jewelers block, as a form of the inland marine insurance category, covers loss to the property of a merchant, wholesaler or manufacturer. Having its origins with Lloyds of London in the 1890s, it is also one of the few insurance policy types designed to provide coverage for so specific a risk class, the jewelry store or pawnbroker. (Many jewelry “stores” are in actuality pawnbroker operations and jewelry is a significant component of many pawnbroker businesses. Thus the overlap.)

Of special note, the jewelers block coverage is extremely broad, allowing for fluctuations in total insured valuation as stores acquire and sell merchandise. The coverage has no coinsurance clause (requiring that the jewelry must be insured at a specified percentage of its full value), a feature that is unique to jewelers block and furriers block policies.

It is not uncommon for jewelry stores to have daily or weekly inventory fluctuations of 10-25 percent of the total. As a result, if the coverage were written with a coinsurance clause, there could be a coinsurance penalty (reducing the loss payment) should a loss occur.

The jewelers block policy is designed to cover many situations or possible losses. These include:

On-premises stock, including those items displayed in showcases and windows facing public streets or a mall “open” environment.

? Money in safes.

? Furniture and fixtures and jewelry molds.

? Jewelry carried about (outside the store) by sales people on their persons.

? Jewelry of others in the insured's care, such as jewelry in for repair, jewelry sold but not yet delivered, or jewelry on consignment from another jeweler or manufacturer.

? Jewelry in transit, including United Parcel Service, Federal Express or registered mail shipments.

The jewelers block coverage requires an application form more comprehensive and detailed than almost all others. Long-standing operators understand and are familiar with the form, which is four pages long, but it can still be forbidding. As a result, jewelers block must be written by professional agents who understand its workings. There is a great deal of data to be collected, and the data submitted on an application is held as a warranty. This is not an area of policy issuance amenable to “quick quotes.”

For example, an insured may report that four staff persons will be on duty at all times. If a store were to be robbed while only one person was present, say due to a lax lunch time staffing policy, the coverage would be void.

Other “fitness to be covered” requirements include such areas or stipulations as:

? Showcase management.

? Tops must be cemented in place, showcases must have locks, and only one showcase section can be open at a time.

? Windows and showcases must be emptied at night.

? All jewelry must be kept in a safe before premises are closed.

? Accepted standards for security, safes and alarms must be met.

Stores dealing in the most expensive lines of jewelry will even have special secured showrooms, possibly with a physical trapping system, as we find in some banks these days. A physical trapping system is a setup where someone entering or exiting a room needs to go through a short corridor with doors at both ends. These doors can be locked remotely. Should a person attempt to flee from such a room with jewelry, they would be allowed through the first door, but the second door would be locked. And once in the corridor, the first door is locked behind the culprit.

While jewelers block is a distinct “contents” policy, the astute agent will be able to package this coverage with other needs of the insured like building coverage, general and product liability, and professional standards liability. The latter would apply to functions such as appraisal for individual pieces of jewelry or, as we often encounter, as a part of estate valuation. The jewelers block policy, itself, is renewed annually.

As suggested at the start of this article, the most important exposure for jewelers block in our opinion is robbery, armed or otherwise. Gangs that commit this form of robbery are, unfortunately, common, and industry groups advise insureds as to current threats. “Theft-in-pocket” crimes inside stores or “grab-and-run” thefts during open hours are also significant risks. On the positive side, we find that insider theft is not that prevalent, although fidelity bonds can be written for employees, if need be.

Next, technology rears its uglier side in the form of almost flawless fake jewelry pieces that can be crafted these days. Jewelers can, and have been taken advantage of, in both direct fake sell offers and “show-and-switch” diversions.

“Show and switch” is usually performed by a thief who will bring an imitation jewelry item a ring, for example and ask to see the real thing. While the clerk is distracted, a swap is done and the thief leaves with the real ring.

Last, the jewelry store owner can be a target of criminals, where kidnap is a means to force opening of on-premises or off-premises safes. This is a serious threat and owners can take out an additional ransom exposure policy to protect themselves.

The first lines of defense are the risk survey, the perpetual inventory and staff training. As might be expected, jewelers block insurance underwriters can and do develop impressive loss control programs.

A risk survey is mandatory for all potential insureds under our jewelers block programs. When the valuation and operation size is appropriate, we bring an international expert in jewelry risk management from England to the United States to conduct these preventive programs. In other instances, in-house specialists conduct the risk surveys, which cover such areas as physical security, inventory control, credit card fraud, typical gambits of the dishonest, and the “handling” procedures addressed earlier.

An important part of inventory control is the perpetual inventories that all reputable jewelry stores maintain. In fact, our policies mandate a perpetual inventory as a condition of warranty in the application procedure.

Last, but not least, we work with jewelry operations in training staff in threat assessment and risk prevention procedures, at all times concerned with human safety.

From the Hope Diamond to the gold bracelet we purchase for a loved one, jewelry has fascinated mankind. In more affluent societies, when the economy is strong, jewelers do well. With outstanding programs of risk assessment and loss control, jewelers block is a fascinating line of business that can yield a profitable sparkle for our industry.

David J. Price is executive vice president and chief underwriting officer for Burns & Wilcox, Ltd. in Farmington Hills, Mich.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, March 19, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.