Specie insurance is a specialized insurance package that covers high-value, portable items. It is a specific coverage form that covers valuable commodities such as cash, bullion, jewels, fine art, essential papers, and even cryptocurrency. At the same time, they are on-site, at a third-party location, or in transit.
A specie policy typically provides coverage for all physical loss or damage risks, with policy wordings adapted to specific risk requirements. Damages or losses caused by natural disasters such as fire, water, and windstorms, as well as theft or physical damage, are among the primary risks covered.
What is typically covered under a specie policy?
Each insurer’s risk appetite for what they want to cover under specie insurance will be different. Here are some examples of common goods that may be covered:
Bullion / refined precious metals – Most people think of gold bars, although bullion can be gold, silver, platinum, palladium, or any other metal. Bullion can be insured at every stage of its journey, from mined ore to refineries, storage in a bullion bank, and sale. According to AXA XL, a “good delivery bar” is a gold bullion bar that is at least 99% pure and weighs 400 troy ounces. It is often kept in secure vaults and carried on armoured trucks.”
Large diamonds and precious stones are extremely rare and valuable. Diamonds and other gemstones (often used in manufactured jewellery, watches, and so on) follow a similar path from mine to a cutter, grader, jeweller, and finally to the consumer, as do bullion and precious metal. Specie insurance safeguards these valuable stones along the way.
We’ve all seen the armoured cars that pull up to banks and other financial institutions to collect and then transport big quantities of cash. Specie insurance safeguards this money while it is in transit. It also applies to other monetary risks such as traveller’s cheques, money, promissory notes, tax, and other negotiable vouchers. One of the more typical causes of loss under specie insurance plans is cash-in-transit robbery.
Fine art – Specie insurance can be used to safeguard valuable artistic media such as paintings, manuscripts, ceramics, historical artefacts, textiles, books, and more. This is one of the most popular specie insurer risk profiles.
Cryptocurrencies are a relatively new entrant into the specie game. “How can you protect a digital item in transit?” one would reasonably ask. That is one of the increasing hazards that specie underwriters are attempting to grasp. “Although digital currencies are produced by mathematical mining rather than struck from mined metals as actual currencies are,” AXA XL says, “they are nevertheless tempting targets for theft.” Cryptocurrencies pose a new type of risk, and future-focused specie underwriters are ready to protect customers.”
Who are the primary buyers of specie insurance?
Policyholders will possess, transport, or manufacture extremely expensive items. They could be mining firms or banking organizations on the commercial side. Then there are the retailers, such as diamond dealers and brokers, the transporters, such as fine art or bullion packers and shippers, and the institutional or individual collectors.
According to Jardine Lloyd Thompson Group (JLT) specie insurance specialists, the onus is on cash-in-transit companies, ATM service providers, gold refiners, and other specie-related enterprises to obtain insurance before transacting with their clients. According to the insurer, “these firms [need] to insure the goods in their care, and insurance forms a part of the contractual terms provided by them to their customers in many cases.”
What are the most common causes of loss under a specie policy?
Theft, physical loss, or damage are the most common causes of loss for all types of specie. According to global insurer Chubb, the most typical type of claim for gold in transit (and most likely other forms of bullion) is an unexplained disappearance, substitution, or theft done by an employee or a third party who has gotten insider knowledge.
“While it is true that most of this risk may be reduced by preventative risk management such as tamper-proof packaging, different transit routes, varying transit employees, and spot audit processes,” Chubb adds, “large losses are hard to forecast.” They can result from uncontrollable events such as a huge automobile accident, sophisticated large-scale theft, fire, flood, or another natural calamity. All of the aforementioned losses have occurred at Chubb.”
Employee infidelity is often brought up by JLT professionals. According to a datasheet issued by the insurance company, “one of the most important hazards is employee theft due to the nature of the items (cash, precious metals, or other valuables of any kind).” As a result, it is critical that your policy adequately addresses this risk.”
