When ‘All Risks Insurance’ Fails: Lessons from a R800k Jewellery Theft

In a case just reported on News24, around R800,000 worth of jewellery was stolen from an overhead compartment during an international flight, revealing critical insights into personal responsibility, risk management and the nuanced world of insurance cover.

 

The Incident

During a 2022 international flight, a South African woman made a fateful decision that would cost her dearly. She removed her tennis bracelet and diamond earrings, valued around R800,000 and placed them in her bag in an overhead locker. Upon arriving at their destination and unpacking at their hotel, the couple discovered the jewellery had been stolen.

 

When they filed an insurance claim, it was rejected based on a policy clause requiring jewellery valued over R150,000 to be kept in a locked safe when not being worn. While the insurer did offer R135,000 as a “goodwill gesture,” the full claim was denied.

 

Beyond the Broker

While much attention in this case focused on whether the broker adequately explained policy terms, this misses the more fundamental issue: the objectively careless decision to leave extremely valuable items unattended in a public space.

 

The Reality Check

Let’s consider this situation objectively:

 

1. Would anyone leave R800,000 in cash in an overhead bin? Most people would say this is a reckless act
2. Would anyone have stored this expensive jewellery in a plane compartment without insurance? We think the answer is no. In this case, it is probable that the client did so, as they had the perceived safety net of insurance.
3. Is this really an insurance issue? Even with perfect documentation and advice from a broker, the policy exclusion would still have applied since, in our view, the behaviour itself was careless. Hypothetically speaking, if the policy was silent on a locked safe for jewellery, the insurer most probably would have rejected the loss due to a lack of reasonable care (a general exclusion in all policies).

 

Insurance and Common Sense

Insurance exists to protect against unforeseen accidents and reasonable risks. When we purchase insurance, we enter into a contract that is designed to provide one with peace of mind for insured events, but also requires us to be responsible and avoid loss. Put another way, to always act as if we aren’t insured.

 

The “All Risks” cover many clients believe they have doesn’t mean “cover regardless of how carelessly you behave.” Every policy has exclusions for situations where the policyholder fails to take basic precautions. In a sense these exclusions exist to ensure the client acts reasonably and provides a fair, contractual basis for insurers to deny losses when client’s fail in this duty.

 

Practical Takeaways

If you own valuable items:

 

• Treat them according to their value. Consider how you would handle the equivalent amount in cash. And act as though you don’t have insurance
• Travel smart. Keep high value items on your person, in hotel safes or leave them in a secure location
• Understand your cover. Know what your policy requires regarding the safekeeping of valuables or any other insured asset for that matter

 

The unfortunate reality is that even if this client had received a thorough explanation of policy terms, the outcome would likely have been the same. The decision to place jewellery items worth nearly R800,000 in an overhead bin on a public flight, where theft is a known risk, most likely goes beyond ordinary negligence into the territory of recklessness, something no insurance policy is designed to cover.