Smartwatches and wearables are becoming more and more widespread. We therefore wanted to answer the question: What category do they fall into for insurance purposes? The answer is not as obvious as you might think.
Smartwatches and wearables are becoming more and more widespread. We therefore wanted to answer the question: What category do they fall into for insurance purposes? The answer is not as obvious as you might think.
Specific limits in home insurance policies
The category is relevant because most home insurance policies set limits on the coverage amounts for jewellery and watches if they are stolen. However, in general, there are no limits on electronic devices. That means the category smartwatches fall under is important, especially since they’re very much in demand, with prices ranging from a few hundred dollars to over a thousand!
Two competing theories
When we asked the question, two competing theories came to the forefront. Some people said a smartwatch is an electronic device. Yes, it’s called a watch and yes, it’s worn on your wrist and shows the time but that’s not the main reason for buying one. What makes them so popular are their other features… Internet, notifications and health-related apps.
Plus, if someone takes their cellphone and attaches it to their wrist or arm (when they’re running, for example), that doesn’t magically transform it into a watch!
Other people have a different theory: A smartwatch is called a watch and it shows the time, so it remains a watch even if it has other features. It’s not so different from other advanced watches that indicate the altitude, atmospheric pressure, positions of the stars and planets, etc.
Calling the experts and deciding on definitions
To settle the debate, we contacted the Insurance Bureau of Canada and got the following reply: First, a watch is never considered jewellery. According to the definition, a piece of jewellery is used only for decoration or adornment. That’s simple and logical. For that reason, watches and jewellery are usually listed separately in insurance contracts.
Even though this type of “watch” can have an 18 karat gold case and even though the company claims that the design for this type of “watch” respects watchmaking tradition and even though it’s worn on the wrist and shows the time, it’s an electronic device, not a watch.
A smartwatch is wearable tech, not a high tech watch. The wristband is simply an attachment system and the watch is simply a form factor.
Insuring items that never existed before
New gadgets of all sorts have been launched in recent years: fitness trackers, smartglasses, smartwatches, e-readers, body monitors, cryptocurrencies, virtual reality headsets, even interactive clothing!
With so many previously unseen items coming onto the market, the insurance industry has to constantly adjust its definitions or choose where each item should be classified. Since this situation is bound to continue happening and you’ll eventually be asking us the question, we have to stay up to date and make sure we’re prepared.
