When all that glitters is stolen

Listen to today's Consumerwatch topic below, or read the details under the podcast.

Here’s s a not-so-fun fact - KZN is the capital of jewellery store heists. So says Andrew Sokolich of Halcyon Financial Solutions - he’s an East London-based insurance broker specialising in the jewellery and precious metals wholesale and retail sector.

He’s dealt with 175 claims relating to jewellery store hold-ups and safe breaks in the last five years, so it’s fair to say he some experience in the financial impact of these brazen heists.

“In the last three months there have been between six and 10 hold-ups in KZN alone,” he says, “usually one of the jewellery chain stores where there is a lot of gold and diamonds exposed, and also the high end stores with the more expensive watches such as Rolex and Breitling.”

One of Sokolich’s 168 jewellery store clients is the KZN store which was robbed last June - in a couple of minutes they cleaned the place out; the store stock as well as a few dozen items belonging to customers, including a R90 000 diamond ring belonging to Louise Wilson of Kloof. We featured her story on Consumerwatch last month.

She’d taken it to the store for cleaning and a valuation in June 2015 and then agreed to let them hold on to it with a view to selling it for her. She kept in contact with the jewellers during the course of the next year, and each time she was told the ring hadn’t sold. It was during one of those visits that she got some very bad news - there’d been a robbery at the store, and her ring was among the many items of jewellery and watches taken by the gunmen.

She hadn’t insured her ring - she’d kept it in a safe in her home until she took it to the jewellers. And she was told that the store’s insurance did not cover her ring.

On the slip she was given when she handed the ring in, a staff member wrote: “To supply valuation. Client would prefer to sell.”

Not a word about having to make sure that she insured the ring herself.

The Consumer Protection Act imposes a heavy duty of care on the shop - to exercise the care, diligence and skill that can be expected of someone managing the property of someone else.

But in the case of an armed robbery, Sokolich says, there can be no claim of negligence.

And the jeweller himself suffered a massive loss. His premium was R80 000 a month but he was still under insured - he was paid out R7 million by his insurer, but he lost R16 million worth of stock. And that’s just the issue, Sokolich says.

It’s virtually impossible for jewellers to have adequate insurance to cover all clients’ jewellers. So when there’s a large claim, as in Louise’s case, they cover their own stock first and there’s not enough for the client’s losses.

So here’s the advice: Firstly to jewellery stores, from both Sokolich and Lorna Lloyd of the Jewellery Council of SA: Be upfront with your customers about the fact that their jewellery is not insured on your premises.

Lloyd suggests that jewellery stores get customers to sign a disclaimer that reads something like: "By signing this invoice, the customer hereby acknowledges his /her duty to have the item insured at all times whilst it is in the possession of the jeweller and the customer hereby agrees and accepts full liability."

Of course, if a store WAS guilty of gross negligence or recklessness in handling or safeguarding a jewellery item, the company would be liable to reimburse the customer for the full value of the item, in terms of the Consumer Protection Act.

Advice for consumers:

If you do have insurance on a piece of jewellery under All Risks, and you take it to a jewellery story for a resizing, remodelling or valuation, be sure to inform your insurer because if it gets stolen from there, your claim is likely to be rejected.

And finally, Sokolich warns consumers not to leave their jewellery in a jewellery store for safekeeping because they think it’s too expensive to insure at home.

“Many consumers feel that their jewellery items are safer in the jewellery store’s safe than in their home,” Sokolich says, “But insurance law does not cover those items. They cannot hold items for clients unless they are being repaired or unless they have been invoiced in as consignment stock. I have so many court cases going on at the moment where people have left jewellery with their jeweller for up to five years, and when it’s stolen they can’t understand why the store’s insurance won’t pay them out..”

As for Louise and the loss of her R90 000 ring, all I can say is that a settlement is being negotiated.

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