Blog: High-end watch claims - can you replace a Rolex?


In a world dominated by smart technology, old-fashioned timepieces are bucking the trend with high demand. Alex Wakefield, executive adjuster at McLarens Private Clients, explains that brokers and loss adjusters need to keep aware of market appreciation to go that extra mile for high-net-worth clients.

In recent years, the wristwatch market has shrugged off existential threats posed by new technology, fashion and recessions with remarkable agility. In a world dominated by smart technology, connectivity and instant fixes, the continued preference for an old-fashioned, mechanical device is at times difficult to understand.

But jewellers are routinely placing an emphasis on watches in their window displays, with price tags that often surprise the casual browser. While nobody is astonished to see the likes of Rolex, Audemars Piguet and Patek Phillippe commanding prices in the tens or even hundreds of thousands, it can be a shock to the uninformed that those same pieces frequently sell for much more than their recommended retail price in the used market.

The list price of the basic version of the iconic Rolex Daytona is quoted at £9550 but, with a seemingly infinite wait list and no way to gauge your progress along it, unworn examples of the same watch routinely sell for £25,000 or more. Pent-up demand shores up prices, with the result being that such watches themselves are rarely seen in shop windows at RRP.

From an insurance perspective, this can make valuations complicated – with real world values often exceeding the sums insured set by policyholders and their brokers – and create challenges around policy wording. When it comes to claiming, this often means disappointment where there is a shortfall in settlement.

Indeed, the ins and outs of the watch market are not common knowledge among most, who in considering their insurance requirements may want to specify an item at the current new replacement value. This will typically be the advice of a broker, but in the case of certain pieces, when a claims situation is faced, it can prove very difficult to replace a lost or stolen watch with settlement proceeds. Moreover, with watches being such high-profile ways to generate cash, they are often sought out by thieves during a burglary.

The assumption that index-linking will attend to market fluctuation is often incorrect, with some key watches offering an investment return far greater than the rate of inflation. Over the course of even one year, it is not unusual for manufacturers to raise their prices by 5% or more, and even experienced collectors lose sight of the real world value of their watches, falling foul of policy limits, further reducing their ability to replace what has been lost. Nobody, especially in the world of high-net-worth insurance, wants to be in a position where a great claim outcome is beyond reach.

So, what can be done to manage these issues? Awareness of the problem is key to understanding how best to deal with it; by engaging with policyholders when agreeing new, or renewal terms, brokers can help their clients think about the best way of insuring their watches, either by specifying at the real-world replacement value or perhaps considering more generous unspecified jewellery cover. While it may be hard to do anything about supply issues in the market, having the items appropriately covered will at least make location of a replacement less stressful if the budget is there to source the required model. 

Awareness within the claims community is also helpful because being prepared for these claims gives rise to an opportunity to demonstrate how knowledge of the policy provisions can maximise indemnity. Adjusters and claims professionals can show their worth by teasing out the additional policy benefits often seen in HNW, such as market appreciation cover, recently acquired items uplift and other tools that, with a little preparation can help make settlement less of a bumpy ride.

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