What is a floating limit?

One way homeowners can reduce their premium is by talking to their broker about their jewellery and watch wearing habits.

Our advisors often speak to clients who have previously had all of their jewellery insured on a worldwide basis, all of the time. This is often inappropriate and results in a higher premium than is necessary.

Rather than limit certain valuables being insured only when locked in a safe which is restrictive and requires that you let us know when you want to wear it, you can opt for a policy with a floating limit instead, saving you money and giving you the flexibility you need.

So what is a floating limit?

As mentioned above, some people will benefit, in terms of lower premium, by taking a “floating” jewellery & watches (sometimes known as valuables)  limit. This works on the assumption that not all of the jewellery is, or can be, worn all the time and that remainder of the jewellery, or some of it, is kept in the home safe.

You do not need to state exactly which items are in and which items are out of the safe. You need to only choose your limit out of the safe at any one time, usually for special occasions. As the items can change, and the total figure up to a prescribed limit can vary, it’s known as a “float” or “floating limit”.

An example of a floating limit

As an example, let’s assume you have £100,000 of insured jewellery. Assume that today, £25,000 of jewellery and watches is worn. On a special occasion, two additional watches and a necklace might be brought out of the safe. This gives a total figure of £40,000.

You’d therefore choose a float of £40,000. You would need to keep a minimum of £60,000 of your jewellery in the safe at any one time. The maximum that insurers would pay, i.e. for a theft of all your jewellery whilst out one evening, is £40,000.

How does a floating limit benefit me?

Insurers apply a lower rate to the in-safe figure than they do the floating figure, therefore lowering the premium without affecting a client’s lifestyle or cover too much. For example, a worldwide rate of 1.5% on £100,000 of valuables would produce a premium of £1,500. With the above float, an example premium would be (40,000×1.5% + 60,000*0.6%) = 600+360 = £960+IPT.

Can I mix a floating limit with jewellery that’s always in the safe?

Yes. You would need to specify which items of jewellery are always kept in the safe.  You would pay a lower premium as above.

Is my safe suitable?

The home safe must be approved by an insurer. It must be of sufficient quality to protect the balance of jewellery left in it. In the above example, the safe would need to have a jewellery rating of £60,000 and a cash rating of £6,000. We can help advise as to what rating your safe should have.

The above is only a guide and cover and rates vary from insurer to insurer, so it’s best to speak to a broker. Just call us on 01622 476433 and we’ll be happy to help.

Stay up to date with us by following us on Facebook, Twitter, and LinkedIn.