The value of precious stones is soaring to record highs, which means now more than ever it is essential to get your jewellery valued and properly insured. 

The Mail on Sunday takes a gemstone masterclass – and discovers many of us ought to take immediate action to avoid the risk of losing a lot of money. 

The sparkling stone feels like a cold pebble as it is placed delicately into my palm with a pair of long tweezers. Gem expert Tobias Kormind then hands me a ‘loupe’ – a magnifying eye piece – to study it close up. In this plush Mayfair showroom in Central London, I hold my breath – it feels like no time to sneeze. 

A girl’s best friend: Our lack of knowledge means those with a jewellery box at home filled with trinkets and family heirlooms may have no real idea of their monetary value

‘What do you think it is worth?’ asks Kormind. I answer that this is clearly a trick question as the stone is too large to be a real diamond – just a brash bit of costume jewellery worth a few quid. 

‘Wrong,’ says Kormind. ‘It is worth half a million pounds.’ I quickly and carefully hand it back. 

Kormind, who is co-founder of online jewellery trader 77 Diamonds, is not surprised that I have failed the test so dismally. He explains that few of us have any idea of the true value of gems. He believes a lack of transparency in the gem industry doesn’t help, but is sometimes intentional – our ignorance offers up opportunities to traders to overcharge buyers and underpay sellers. 

But our lack of knowledge means those with a jewellery box at home filled with trinkets and family heirlooms may have no real idea of their monetary value. 

As prices have risen in recent years, even those who have had valuations in the past may not know the current value of their gems. 

Heather Callaway is a fellow of the Institute of Registered Valuers and vice-chair of the National Association of Jewellers. She warns: ‘There is a huge risk that your jewellery is undervalued – particularly with the soaring price of some pieces in recent times caused by a drop in supply with gem mines closing during lockdown and a rising demand among middle class Asians after precious stones. A valuation at least every five years is important.’ 

If your jewellery is lost or stolen and is not properly valued, it may void your policy and some insurers might refuse to pay out on a claim altogether.

Know their worth 

Gem valuations are based on ‘four Cs’, says Kormind. These stand for carat, colour, cut and clarity. 

Carat is the measurement of weight for gemstones – one carat is 200 milligrams. The diamond in my sweaty palm is 10 carat – so it weighs two grams. 

Colour also affects price. Sparkling white diamonds tend to have the highest price tags – the more yellow-tinged, the cheaper they tend to be. 

However, those with a slight blue or pink hue have risen in value by up to 200 per cent and 400 per cent respectively over the past ten years. 

Although diamonds are the most valuable, precious stones, such as emeralds, rubies and sapphires have seen price hikes of up to 2,000 per cent in the past decade (see right). 

The cut – how a craftsman has chipped away at the stone to make it sparkle – is also vital. 

So is clarity – which looks out for imperfections. Kormind says: ‘You might find a one carat diamond is worth anything from £1,000 to £20,000 depending on the colour, cut and clarity.’

Insuring your gems 

Keep a record of all of your jewellery so you have proof of what you own to show your insurer should you need it. 

Take photographs and keep receipts if you have them. Make sure you keep this documentation somewhere safe, but separate from the jewellery itself. 

Many insurers ask you to itemise all jewellery worth more than £1,000. Fail to do so, and they may not pay out. Some insurers require professional valuations, others are happy with rough estimates. 

Malcolm Tarling, a spokesman for the Association of British Insurers, says: ‘First, you should speak to your home and contents insurance provider to see what they actually want – as there may be no need to spend money on a professional valuation if not required. 

‘But you should certainly get an idea of what heirlooms are worth.’ 

Tarling adds: ‘You may have pieces that have been passed down the family which are of huge sentimental value, but worthless – or they turn out to be priceless treasures. 

‘You must get them valued so they are insured for their true worth.’ 

Also, revisit your records every few years as values change. 

Callaway adds: ‘It can be heartbreaking when the first time someone comes to us is when it is too late – and valuables have already been lost or stolen.

‘The onus is on the owner to prove value so it is vital to have an up-to-date detailed inventory as insurers are not duty bound to accept old or poorly described valuations.’ 

The 150-strong Institute of Registered Valuers offers professional guidance and quotes that should be accepted by insurers. 

The institute is linked to the National Association of Jewellers, with 2,200 members who can also offer valuations. 

They provide fully detailed accounts of pieces and can charge £50 per item. Some jewellers and auction houses, such as Bonhams, offer free valuations and estimates. 

If you have particularly expensive jewellery, you may struggle to get cover in a standard home and contents insurance policy. In such cases, consider taking out a separate policy. 

Cover for valuables worth £10,000 or more and can cost around £100 a year. Jewellery insurance typically costs one to two per cent of the value of the treasures being insured.

Better safe than sorry 

A security safe is not only a practical precaution, it may also be required by your insurer. 

Consult a professional locksmith who is a member of the trade body Master Locksmiths Association for guidance. 

The security of a safe can be measured using strict manufacturing standards that are given a stamp of approval by the Association of Insurance Surveyors. 

A basic ‘S1’ rated safe covers theft of up to £2,000 in cash and £20,000 in valuables. 

Some safe manufacturers follow the European safe standard EN1143, which has its own grading system. A ‘0’ rated safe is acceptable for up to £6,000 of cash and £60,000 worth of valuables. 

A quality safe can be bought from £400, but budget at least a further £150 to have it professionally fitted and bolted to solid walls.

And if you’re buying… 

Valuing items with an untrained eye is hard. That is why Kormind advises buyers to ask for proof of its quality. 

‘Unfortunately, there are unscrupulous dealers – so you can be ripped off unless you know what you are doing. Never buy stones without a certification of quality. 

‘The one we recommend is the GIA – the Gemological Institute of America. If a dealer can’t provide this, ask yourself why.’ 

Diamonds bought in Britain are subject to 20 per cent VAT. If you make money on the investment when you sell it – and stones are worth more than £6,000 – there is a minimum 10 per cent capital gains tax on profits above a £12,300 annual exemption.