Excellence in Claims Handling
Posted on October 29, 2026 by Barry Zalma
Common Problems in a Jewelers’ Block Policy Investigation
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The History of the Jewelers’ Block Policy
The ‘jewelers’ block policy’ had its origin about 1920, and since that time the policy and the proposal upon which it is based have become more or less standard.
The Inland-Marine Insurance Bureau, of which appellant is a member, prescribes contracts and proposals for such policies that are identical for all bureau members. The bureau forms for proposals and policies used in the jewelry business are accepted in Texas.
Under the standardized system of issuing a ‘jewelers’ block policy,’ the merchant executes a proposal which is submitted to the insurance company, and often reviewed by the bureau, for purposes of establishing a rate and approving issuance of the policy. When the rate is ascertained and the policy issued, the policy, with the proposal attached, is sent to the local agent for delivery to the insured. [Great Am. Ins. Co. v. Lang, 416 S.W.2d 541 (Tex. Ct. App. 1967)]
Because many sales in the jewelry business are for cash, jewelers may be tempted to make sales “off the books.” Sales taxes are not recorded or paid. Income is reduced to avoid payment of income taxes. The “cost of goods sold” is recorded as a greater percentage than reality.
Some jewelers refuse to update their inventories to comply with value changes in their merchandise and, therefore, may be carrying gold on their inventory that was purchased many years ago at $100 per ounce and is now selling for $300 (more or less) an ounce. Since the policy limits the liability to actual cash value or the smallest amount appearing on the insured’s books, by not updating his or her records, the insured will, in the event of loss, fail to recover the actual cash value of his loss.
Mysterious Disappearance
A New York court found that a claim is outside the ambit of coverage on the basis of the policies’ exclusionary clause for “unexplained loss, mysterious disappearance or loss or shortage disclosed on taking inventory.”
(c) 2026 Barry Zalma & ClaimSchool, Inc.
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