How to Insure Physical Gold
Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.
Physical gold lets investors keep up with inflation and mitigate the portfolio risks of market uncertainties. While you can buy gold stocks and ETFs to gain exposure to the precious metal, those investments do not give you actual ownership of gold.
Gold stocks and ETFs can dilute shareholders by issuing new shares, while physical precious metals are tangible assets that don’t present that risk. Additionally, when it comes to investing in gold equities, you have to trust that the third party managing the investments will make prudent decisions.
And while buying physical gold involves more work, as you’ll have to store gold in your house or in a secure location like a safe deposit box, its intrinsic value is not subject to the same type of market swings that can affect stocks, ETFs and even bonds.
However, it’s important for any gold investor to insure their physical precious metals. This guide will unveil how that process works.
Why insure physical gold
Insuring physical gold gives you financial protection in case your precious metals are stolen or damaged. It’s common for people to insure their most prized assets, such as their homes and cars. When it comes to gold, it’s the same story.
However, you’ll need a separate insurance policy for precious metals, as even the best homeowner’s insurance policies will carry limits on coverage. You won’t find much flexibility with that type of coverage, though: Many homeowner’s insurance policies do not cover gold or only insure up to $250 of the precious metal.
That’s not nearly enough protection, which is why investors should seek out separate insurance plans for their physical gold. While it is an extra expense, it’s worth the cost if you have to make a claim. Ideally, you never want to use your insurance policy, but having one in place gives you peace of mind and an extra layer of safety.
How insuring physical gold works
Some insurance companies specialize in shielding you from financial losses if your gold is stolen or damaged. You will have to follow these steps to insure physical gold:
Step 1: Know how much insurance you need
You will have to count and weigh your gold and determine how many coins and bars you have. You will have to present this information to the insurer, which may also require you to submit color photos.
Step 2: Contact insurance companies
You shouldn’t stop your search with the first insurance company you find. Reaching out to multiple gold insurers can help you find more competitive premiums and better coverage. Insurers will request an appraisal of your gold so they know the risk involved with insuring your physical assets.
Step 3: Compare rates
Each insurance company will provide a proposed contract that includes the rate and terms. You can compare premiums to decide which one is right for you. While price is a key factor, it’s also good to consider other details, like the quality of a company’s customer support, reviews and how easy it is to receive compensation for a claim. Just like with online gold dealers, it is important to find a reputable insurance company for your physical gold.
Step 4: Agree to a contract
Once you find the best policy for your needs, the final step is entering a contract. At this point, your gold is insured and you will have to pay regular premiums. If you ever need to file a claim, make sure you gather supporting evidence, such as documents and video footage.
How much does it cost to insure physical gold?
The cost to insure gold typically ranges from 1% to 2% of the asset’s value. For instance, if your gold is worth $10,000, you will probably pay between $100 to $200 per year to insure it. However, a few variables come into play that can impact the policy’s premium.
The type of gold
Rarer gold coins and bars will cost more money to insure. If an insurer can easily replace your gold, the premium may be less.
Your location
Insurance companies charge higher premiums for people who live in areas with high crime rates and a greater likelihood of natural disasters.
Your safety procedures
Storing gold in your house and implementing safety protocols like having cameras and a home security system can result in lower premiums. You can end up with higher insurance premiums if you store gold in a bank’s safe deposit box. Be mindful that your gold is not automatically insured just because it’s stored in a safe deposit box.
Coverage
Some insurance policies only provide partial coverage while others offer full coverage. Getting an insurance policy that offers more coverage will result in higher premiums. You’ll also have to pay extra if you want to insure gold assets at higher valuations, such as $10,000 worth of gold compared to $3,000 worth of gold.
How much gold should you own?
Each investor has their own preferences, but it’s a common recommendation to have no more than 5%-10% of your investment portfolio allocated to alternative assets like gold.
As safe-haven assets that act as stores of value, precious metals can minimize the impact of inflation on your portfolio. Gold also tends to do well during periods of geopolitical unrest. For those reasons, the yellow metal is seen as a hedge that allows investors to lower their overall risk exposure.
One of gold’s strengths is how it is uncorrelated with the stock market. Gold can perform well during stock market corrections and crashes. Or, as has been evidenced in 2024, the precious metal can perform well alongside the stock market as it sets numerous all-time highs.
Investors should review their portfolios and determine their risk tolerances before deciding how much gold to accumulate.