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Thanks to the fall in gold prices, that breathtaking sapphire and ruby necklace you saw in the store a few months ago is now your very own. This adds to the other pieces of jewellery you painstakingly collected over the last few years. But keeping them all in your Godrej almirah at home may not be the safest thing to do.
Isn’t tucking them into a bank/private locker or taking an insurance policy to protect them the next best thing? No doubt. But the costs involved in their safe-keeping seem to be steep and the liability of the safe-keeper, restricted. So, when you decide among these options, make an informed choice.
Strings attached
Consider bank lockers. On paper, the only requirement to obtain a bank locker is being a savings/current account holder of the same bank.
In addition, banks are allowed to obtain a fixed deposit which would cover three years’ rent and charges for breaking open in case of an eventuality. But in reality, you may not get a locker even if you fulfil both requirements. Most banks ask you to open a fixed deposit for a sum more than the three year rent rule, or make investments in other avenues such as ULIPs.
Even if you were lucky enough to get a locker without any such hassles, rentals are not cheap. Branches of the same bank, even within the same city, may have differential hire charges.
Annual rentals across public and private sector banks vary anywhere between Rs 1,000 and Rs 45,000, depending on the size of the locker, the city, locality.
Besides, service tax and administrative charges are added. Discounts on rentals come only with certain types of savings accounts such as privilege accounts. . In some cases, rentals may not be refunded if the locker is surrendered.
Beyond all this, in case of theft or loss of contents, banks may not entertain all claims.
They may also not compensate you fully or even partly in case the contents of the locker are damaged/destroyed due to factors beyond their control such as flooding or fire.
If you are taking home insurance, you can choose to cover the contents of your house such as furniture, electrical equipments and jewellery along with insuring the structure of the house. Some insurers like ICICI Lombard allow you to take a cover for the contents alone too. Gold jewellery, sliver articles and precious stones are normally insured against burglary and theft.
Limited cover
But most insurers offer restricted cover for jewellery. When covering contents, insurers normally provide sub-limits for each household item like furniture and fittings, appliances and jewellery.
Take Royal Sundaram’s offerings for example. There are three plans for insuring contents – Silver (total coverage of Rs 4 lakh), Gold ( Rs 6.5 lakh) and Platinum ( Rs 11.5 lakh).
The premium for even the highest Rs 11.5 lakh cover seems affordable, at Rs 3,777. But the sub-limit for jewellery under this plan is only Rs 1.5 lakh and within that, the limit per item is only Rs 20,000. ICICI Lombard covers loss of jewellery only up to 25 per cent of the total content sum insured or Rs 1 lakh, whichever is lower. The Householder’s policy of New India Assurance, however, requires you to insure jewellery and valuables on a market value basis under its ‘all risk’ cover.
Hence, keep in mind that while jewellery is a one-time purchase, locker charges and insurance premiums apply year after year. This can add up to a sizeable sum over a long period. Choose with care based on your needs.
Restricted presence
As an alternative to banks, lockers from private companies such as Indian Safety Vaults and Navketan Lockers are available. But they don’t come cheap either. Say you want to hire the smallest sized locker for a year at Navketan in Hyderabad. Along with a rent of Rs 3,600 (excluding service tax), Navketan requires you to pay a caution deposit (refundable) of Rs 2,500.
If you think the rent is too much, then you have the choice of a ‘low rental plan’ where you pay a rent of only Rs 150 per month (Rs 1,800 per year). But you have to cough up a caution deposit of Rs 11,250. Another disadvantage with private lockers is that their presence is restricted to few big cities, making it out of reach for many.
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