All About Precious Metals Insurance

Investors in gold and other precious metals can often find abundant helpful information about the precious metal buying journey. Answers to questions regarding the types of bullion to choose, gold versus silver, payment methods, how to sell back bullion, or proper storage tips are easily found online. However, insurance coverage for precious metals is seldom explained, not discussed enough, and much less understood. This article aims to bridge that knowledge gap and, hopefully, answer your questions about precious metals insurance.

What Is Precious Metals Insurance?

Precious metals insurance is a type of insurance coverage that protects individuals or businesses with valuable metals, such as gold, silver, platinum, and palladium, against loss or damage. This insurance policy often comes under the specie insurance umbrella.

Specie insurance is named after the term "specie," which historically refers to money in the form of coins rather than notes. The use of "specie" highlights the specialized nature of this insurance, catering to the unique risks and considerations involved in protecting valuable collectibles, treasures, and assets.

In the context of insurance, "specie" has come to encompass a broader range of valuable items beyond just coins, including precious metals, diamonds, numismatics, rare artifacts, and other items of significant value that are difficult to replace. Certain future-focused specie underwriters also provide insurance coverage for cryptocurrency.

Coverage Of Precious Metals Insurance

When it comes to the insurance world, insurance companies often offer 2 types of coverage - "named perils" or "all risks." With a named perils policy, coverage is limited to the specific risks clearly listed in the contract.

On the other hand, "all risks" insurance coverage generally insures against all potential risks, with certain exclusions explicitly stated in the policy. That means that all risks are covered unless they are excluded.

"All risks" Insurance Does Not Cover All Risks

Precious metals insurance is commonly offered with "all risks" coverage by default. To people unfamiliar with the insurance industry, they may mistakenly assume that "all risks" are covered, as the term suggests.

However, this is not the case. As mentioned earlier, "all risks" insurance insures against all potential risks, such as loss and damage, but excludes certain risks explicitly listed in the policy. Common causes of loss and damage covered under "all risks" insurance include:

• Third-party theft
• Fire
• Transit

Risks That Are Commonly Excluded in "All Risks" Insurance

It is important to pay attention to the following common risks often excluded from "all risks" insurance to assess if insurance coverage meets one's requirements properly.

Infidelity of employees (a.k.a. inside jobs)

"Infidelity of employees" coverage in insurance, also known as fidelity insurance or employee dishonesty coverage, is designed to protect businesses against financial losses caused by fraudulent acts committed by their employees.

Mysterious disappearance

In the insurance world, 'mysterious disappearance' coverage protects against the loss of an insured item where the cause of loss is unknown or cannot be explained by any of the perils listed in the insurance policy.

The insured item could be stolen, destroyed, or lost, but the cause of disappearance cannot be ascertained. Therefore, losses as a result of negligence or carelessness are unlikely to be approved if the insurance policy does not cover mysterious disappearance.

Therefore, the insurance underwriter needs to be very confident of a company's security measures and risk level before mysterious disappearance insurance coverage is granted. For precious metal vaults, the insurance company will likely send an inspector to check the vault storage premises as part of the risk assessment if mysterious disappearance coverage is requested.

Terrorism and sabotage

Before the events of 9/11, terrorism coverage was typically bundled into standard commercial insurance policies at no additional cost. Now, however, terrorism insurance is usually available as a separate add-on, with premiums that more accurately represent the prevailing risk.

Terrorism risk can be difficult to predict or quantify and would require specialist risk assessment by insurance companies.

War

War or War Risk Insurance is a type of insurance that covers damage as a result of an act of war, including invasion, rebellion, hijacking, and insurrection. In general, acts of war are almost never covered by insurance due to the realization that war damage can be incalculable. Insurance companies base their rates and coverage limits on definable risks.

However, war risk insurance is rare and almost impossible to obtain. War risk insurance is most common in the marine and shipping industries, especially if their oil tankers and vessels are required to travel to high-risk or conflict zones, like the Persian Gulf.

Natural disasters

Natural disaster or catastrophe insurance protects against damage caused by earth movement (such as earthquakes, mudslides, and landslides) and storms (such as floods). These catastrophes are often viewed as low-probability and high-cost events and are often not included in all-risk insurance by default.

Catastrophe insurance is offered based on risk assessed for a jurisdiction or location. Naturally, there is little demand for natural disaster insurance in places with low natural disaster risks, like Singapore.

When Storing Precious Metals With a Private Vault is Better Than at Home

When you begin buying gold and silver with a precious metals dealer, you may consider storing your bullion at home instead of in a private vault or depository storage. Common considerations for home storage include ease of reach, the lack of storage fees to pay, and the anonymity that comes with self-storage.

While there is no right or wrong to one's bullion storage strategy, many physical precious metals buyers often misjudge risk with home storage. Here are some reasons why storing precious metals in a private vault is better than at home.

#1 You have a substantial bullion and coin collection

Using your home as a safe storage location for your precious metals is feasible when you only have a few troy ounces of bullion or rare coins. However, suitable secure storage space becomes an issue when your bullion hoard grows substantially.

Precious metals are dense metals, and their small size, like a 1 kilo-gram or 100-troy-ounce bar, may belie the weight they exert on the floor of your home. Stacking more bullion than your floor's loading capacity can handle can crack the floor or compromise its structural integrity.

This is why private vaults are often built with sufficient floor loading capacity to handle the weight. As an example, The Reserve's vault in Singapore has one of the highest floor loading capacity (90kN/m2), allowing it to store large quantities of precious metals within a given space.

Keeping increasing amounts of bullion at home in one place also increases the risk of total loss and damage due to fire, theft, structure collapse, and other home-related risks.

#2 Your home insurance will not suffice

Precious metals are often treated as financial insurance against an economic collapse or financial crisis, so they are often bought to a substantial value to give the owner options in such dire circumstances. How much good can 10 ounces of silver or 2 ounces of gold do if there is an economic collapse tomorrow?

With a sizable amount of gold and silver bullion stored at home, you will need full insurance from your homeowners policy. Unfortunately, the best home insurance will not be able to insure the full value of your gold and silver, and will likely have a coverage limit that is too low. Even if you find home insurance that fully insures your bullion, the premium is likely to be very costly.

Moreover, certain coverages against terrorism and mysterious disappearances are unlikely to be available for home insurance.

#3 The country where you store your bullion matters

If you live in an area or country where crime and gun violence are highly probable, your precious metals stored at home are exposed to the same risks. Relying on home security systems or personal weapons can create a false sense of security. Technical failures, power outages, or simply being outmaneuvered by experienced criminals can render these defenses ineffective.

Experienced criminals are likely to plan the robbery in advance, including escape routes, how to neutralize security systems, and how to deal with occupants. Their advantage of having the element of surprise will likely catch homeowners off guard, asleep, or in a vulnerable state, reducing their ability to respond effectively.

There may be a significant physical disparity between the homeowner and the intruders, especially if there are multiple assailants. This disadvantage makes successful defense more challenging and risky.

The presence of family members, especially children, complicates the decision to confront or engage with intruders. The priority shifts to ensuring their safety, which may mean avoiding confrontation to prevent harm to loved ones. The best security system or hiding places for your precious metals may be undone easily in a hostage situation.

Store Precious Metals Safely With The Safe House in Singapore

The many risks associated with storing precious metals at home are reduced when you store bullion in a private vault like The Safe House vault in Singapore. Designed specifically to mitigate and minimize counterparty risks to stored bullion, The Safe House vault gives peace of mind to our clients.

We Store Exclusively in Singapore

When you store precious metals at The Safe House exclusively in Singapore, your precious metal assets are protected under the sole jurisdiction of Singapore, one of the safest countries in the world. As we only store in Singapore, your assets are not exposed to risks from other foreign jurisdictions.

Guns are prohibited in Singapore, which is why gun violence is extremely rare. Moreover, the penalty for the unlawful and malicious use or attempt to use any offensive weapon to cause hurt is severe - life imprisonment and at least 6 strokes of the cane.

Singapore is also one of the most prosperous countries in the world, with no net debt, and is a net creditor nation. The city-state is bestowed the highest credit ratings by Fitch, Moody's, and Standard & Poor. Today, Singapore is an important international financial center, with an open economy that attracts heavy investments from foreign investors.

The country is also known for its low tolerance of corruption, being ranked the fifth least corrupt country in the world by the 2023 Transparency International Corruption Perceptions Index (TI-CPI).

Storing in Singapore also has the added benefit of extremely low risk of natural disasters like earthquakes, hurricanes, typhoons, and tsunamis.
These qualities, and more, make Singapore one of the best countries to store precious metals.

We Have One of the Best Precious Metal Insurance

Given our years of experience operating a precious metal vault, we have obtained one of the most comprehensive precious metal insurances to safeguard bullion stored within our vault’s premises. As the amount of bullion stored at The Safe House has increased over the years, we have continuously raised the insurance coverage to ensure that all precious metals stored are fully insured.

Our precious metal insurance has more substantial coverage than the standard all-risk insurance policies, additionally insuring stored bullion against the infidelity of employees (inside jobs), terrorism & sabotage, and mysterious disappearances.

As explained previously, our obtaining of the mysterious disappearance coverage demonstrates the confidence insurance underwriters have in The Safe House's security measures, processes, and protocols. Insurance inspectors had visited The Safe House in person to assess its security.

In the unlikely event of an unexplained loss, our vault's insurance can sufficiently compensate for the loss with certainty because it is underwritten by Lloyd's of London, the most well-known insurance body in the world. Lloyd's of London is known for its global reach, financial strength, and shared risk approach to insurance.

In addition, we offer you the option to insure bullion when you hire one of our safety deposit boxes. This is unique as most safe deposit box operators and banks do not provide insurance for the box contents.

We Have One of the Best Security Measures

The precious metals stored in our safe deposit boxes and vaults are secured by some of the most advanced security systems, from high-definition cameras, lasers, motion sensors, and seismic detectors. Located within The Reserve, a facility owned by our parent company, Silver Bullion, access is restricted to registered visitors only during the daytime.

Intrusion detection systems are also monitored by separate security companies providing redundancy.

With ISO 9001 certification, 24/7 security, and management by a team of industry veterans, The Safe House vault is one of the world’s safest storage options for your valuables.

Conclusion

Investing in precious metals comes with its own set of risks. These risks can be mitigated by ensuring that your bullion is fully protected by precious metals insurance. Remember to assess an insurance policy beyond the standard "all-risk" insurance coverage offered by the insurance company, taking into consideration other protections you may require for your assets. The most complete protection for your precious metals may go beyond insurance, and you may also need to consider diversifying your bullion holdings to a safe jurisdiction like Singapore for greater safety from today's geopolitical risks.