Insurance Companies' Approach to Valuable Art and Jewelry Holdings of High-Net-Worth Individuals
High-Value Art and Jewellery Insurance in India
Key Figures:
- Rs 5-10 lakh: Minimum value threshold for lower-value pieces
- Rs 35 lakh: Claim settlement amount for the disappearance of a gold chain and a pendant
- 1 year: Typical premium-paying term
Overview
High-net-worth individuals (HNIs) in India seek protection for their high-value collections through specialized insurance policies. Insurers use a tiered approach to evaluate risk, requiring formal valuations for expensive and rare items and basic listings for lower-value pieces. Premiums are typically high and come with a one-year premium-paying term.
Risk Evaluation and Premiums
Insurers assess customer risk by evaluating their profile, financial standing, credibility, lifestyle, reputation, past claims history, and asset management. A formal valuation is required for expensive and rare items, while a basic listing suffices for lower-value pieces. Location is an important factor, with insurers covering Indian residents and all risks, even while traveling overseas. There is no minimum limit cap, as insurers underwrite customers first. Premiums are usually high and cannot be less than the minimum threshold.
Claims Settlements
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Claims settlements are rare occurrences, but insurers provide comprehensive coverage for HNI clients. Insurers collect documents, item valuations, and photographs during onboarding and claim underwriting. Tax treatment of claims varies depending on the ownership status of the assets, with insurance payouts not taxable if proceeds are received on loss or destruction of privately held high-value personal collections.
Tax Treatment of Claims
Insurance payouts are not taxable if proceeds are received on loss or destruction of privately held high-value personal collections. However, the claim amount would be taxable if these assets are held as stock-in-trade or the claim represents loss of profits rather than loss of the asset itself. For businesses, insurance payouts from losses of high-value collections are generally treated as capital assets.
Key Players
- TATA AIG General Insurance: Offers high-value art and jewellery insurance policies to HNIs
- King Stubb and Kasiva: Tax consultancy firm providing guidance on tax treatment of claims
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