Warning for wealthy South Africans

The number of millionaires is increasing rapidly, and experts warn that this group should insure their luxury items to protect against costly damages, theft and losses, since regular insurance may not offer adequate coverage.

This is according to Elite Risk Acceptance MD Tarina Vlok. Elite Risk Acceptance is a wholly-owned subsidiary of Old Mutual Insure, which services high-net-worth individuals.

With Africa’s millionaire population set to rise by 65% over the next decade, the continent is emerging as a key growth market for global luxury brands.

Increasingly, high-net-worth individuals are investing in luxury goods, such as jewellery, watches and designer fashion.

But as the demand for high-end items rises, so too does the risk of losing them to theft, loss or damage, Vlok said, highlighting the importance of insuring your most valuable assets.

The global luxury market is experiencing a slowdown, with its consumer base expected to be eroded by 50 million people due to weaker demand from China and the US.

At the same time, however, the African market is experiencing a resurgence.

Iconic brands like Gucci, Louis Vuitton, Chanel and Prada are looking to expand their presence in Africa, driven by a growing middle class, increased disposable income and a heightened appreciation for high-quality products.

For instance, watchmaker Rolex is set to open its first standalone store in SA’s Diamond Walk at Sandton City later this year.

A key market for high-end goods is South Africa, where the luxury retail trading density has risen by 8%, outperforming the global average.

“Luxury brands demonstrate greater resilience during economic downturns,” Vlok explained.

“Even though many can’t afford a new Burberry coat for R48,700, they can find a second-hand one in excellent condition for less than a tenth of the price.”

“The same goes for Cartier Love bracelets. And women are no longer waiting for men to spoil them. They are buying luxury goods like jewellery for themselves these days.”

Insuring luxury goods

Given the surge in demand for luxury goods, it makes sense to invest in the right insurance policy to protect your valuables from theft, loss, or damage.

“Standard insurance policies may not adequately cover luxury items,” Vlok explained.

“Wealthy people must ensure that they have appropriate short-term insurance cover to match their risk appetite.”

Vlok noted that Elite’s target market may have jewellery items valued in excess of R5 million and an entire jewellery collection valued well into the tens of millions. “This is the market that we cater to,” she said.

“If you’re looking for the best insurance, we recommend speaking to your broker, who will organise the optimal coverage tailored to your specific needs.”

Vlok explained that there are a number of tricks South Africans can use to get the most out of their insurance.

The first thing to remember when buying luxury goods is to keep your purchasing invoice and make sure you authenticate it, Vlok stressed.

Because insurance is a contract, companies will not insure illegal items. Fake luxury goods are illegal and must be destroyed.

In cases like these, insurers are unlikely to pay out, Vlok explained.

“To prevent buying fake goods, we recommend only shopping through well-known dealers.”

Another tip is to store your luxury goods securely.

“Lock your expensive jewellery items in a wall-mounted or walk-in safe, which no staff member has access to. Don’t leave your jewellery lying around if you’re taking a nap.”

It’s also important to have your luxury assets valued at least every three years to ensure your coverage reflects current market values and inflation.

“Some jewellers offer home visits, so you don’t have to worry about keeping your jewellery safe while in transit,” she says.

Lastly, remember that selfies boasting your new purchase may not be a good idea. “Theft is still a reality, so don’t geo-tag yourself on social media,” she cautions.

With these guidelines in mind, Vlok said that people will be able to enjoy their designer wear without any fears. “Insure your luxury items properly – they’re an excellent long-term investment and it pays to treat them well.”