FEATURE: Insurance claims in the post-Hatton Garden raid era

CULVER CITY, CA - MARCH 31:  Jewelry backstage during the Frankie B Fashion Show at Mercedes Benz Fashion Week in Smashbox Studios on March 31, 2004 in Culver City, California.  (Photo by Frazer Harrison/Getty Images)

The Hatton Garden heist has shaken the industry; not just for those whose goods were stolen, but for those who have niggling doubts about the quality and cover of their insurance policies too. Experts from T H March, Assetsure and the British Insurance Brokers’ Association offer their insights for concerned jewellers

Arrests have been made and the assailants have been charged, but what does this mean for the countless victims of the Hatton Garden heist — many of whom will be severely affected by the gang’s actions?

In April, we reported that specialist insurance provider Assetsure has seen a surge in the number of enquiries about safety deposit box policies as a result of the incident. What’s most worrying, however, is how many members of the trade are confused about the cover their policies offer; regularly relying on safety deposit companies for levels of insurance they might not have.

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Assetsure managing director James Farley, comments: “Not all safety deposit box companies offer insurance. Whether they do or not and the extent of the cover provided is usually specified in the terms and conditions of the contract. Unfortunately, people often don’t consider the need to insure items stored in a safety deposit box, believing the facility to be entirely secure.”

The Hatton Garden heist has proved that this is simply not true. In this case the gang drilled through two metres of reinforced concrete and abseiled down lift shafts to get to their target — the stuff of movies comes to life.

Farley continues: “If the storage company does offer insurance then this may be provided either on a ‘specified’ – where a fixed value must be agreed and items declared – or ‘blanket cover’ basis.”

Many jewellers will assume their contents are covered on their home insurance policies, or will try and extend their home policies to cover these items. However, both Farley and Andy Thornley, head of communications at the British Insurance Brokers’ Association (BIBA), suggest caution in this area.

Farley says: “Not all insurers will offer this option. Those that do may also require you to inform the provider each time that you wish to temporarily retrieve items from storage. For example, if it’s a piece of jewellery that you wish to wear for a special event. Making such arrangements can be complicated and incur administrative charges.”

Thornley adds: “Events such as this [the Hatton Garden raid] and the associated publicity that goes with it makes people think about the insurance they have and whether they have the right cover in place. Perhaps they have items under a house policy, but this doesn’t give them the security or peace of mind they want for particular items. Whenever there is insurance in place there will be a limit.”

To avoid pushing the boundary limits on home insurance policies, for example, Farley and Thornley suggest specialist policies conducted by professional insurance brokers. “Specialist schemes, such as the one offered by Assetsure, will insure almost any item(s) kept in a storage facility, including jewellery, precious stones, stamps, coins and bullion — essentially anything with value where ownership can be established,” Farley adds. “Our flexible policies can be tailored to allow for periods during which the items can be temporarily removed from storage, without the need to inform us or extend the cover.”

During normal working hours, or in cases where items are stored on-site, jewellers tend to rely on Jewellers’ Block insurance policies — an expensive option with plenty of stipulations outlining the necessary security measures that need to be set in place. Farley notes: “If you don’t have a safe, or you are based in an area where there is a cluster of jewellery workshops or retail outlets in close proximity, off-site storage is especially important. However, as the Hatton Garden incident has highlighted, this measure will not necessarily protect the value of items against theft.”

For jewellers with Jewellers’ Block insurance it is possible to arrange for a specialised ‘Outside Limit’ cover for banks and safe deposit vaults. As part of this agreement, the insurer will have set requirements for the transportation of goods. For smaller jewellers who don’t have Block insurance things can be even more problematic, with business insurance policies and outside limit covers all worth considering.

Thornley adds that finding a workable legal or litigation route in the case of the Hatton Garden heist is likely to be difficult, especially without knowing the ins-and-outs of contracts between Hatton Garden Safety Deposit Ltd, the security company who made the initial check of the building and each individual customer with a deposit box.

Scotland Yard admitted it failed to respond correctly to the Hatton Garden Safety Deposit alarm system in May, with an official statement noting: “Our normal procedures would have resulted in police attending the scene, and we apologise that this did not happen. “In this case, the owners had been notified by the alarm company and a security guard attended the building but saw nothing more than our officers would have done had they been deployed.”

However a specific piece of case law is likely to make legal action against the police complicated for victims. Called ‘Michael & Ors vs. Chief Constable of South Wales Police & Anor 2015’, the case found that the police have a general duty of care to the public, but don’t owe a duty of care to prioritise one incident over another. This will have major implications when discussing the down-grading of the Hatton Garden call, resulting in a lack of police presence.

The recovery of stolen goods immediately following the arrest of members of the gang also threw up questions about the speed of settlements for victims of the robbery. Chartered insurance broker, chairman and broking director of jewellery at T H March, Mark Smith, comments: “As THM’s managing director Neil McFarlane explained recently, matters are progressing with our clients’ claims with all efforts made by ourselves and the underwriters’ representatives to bring claims to a close.”

If insurance claims are settled and goods are subsequently recovered, the property is deemed to belong to the underwriters and should be returned to them accordingly. “However, underwriters may at their discretion offer the insured the right to purchase their items back by returning the claim payment made.”

In the long term Assetsure managing director James Farley believes the industry will begin to place the protection provided by off-site facilities under much greater scrutiny. He adds: “The incident is also likely to encourage storage facility companies to begin offering insurance as part of the service they provide.”

Thornley concludes: “You often don’t realise that you’re not covered until the worst happens and insurance is there to give you that piece of mind. Some people see it as ‘I’m paying money in but I’m never going to make a claim,’ so that doesn’t make sense from an investment point of view. This has been a big wake-up call.

This feature originally appeared in the July issue of Professional Jeweller, read it online here.


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