How to insure physical gold

Gold has been a popular investment in recent years. Not only has its growing price offered the promise of solid returns, but its role as a diversifier and hedge against inflation has made it a key component in a well-balanced portfolio as well. It's also easy to purchase and invest in — even for beginners.

There are nuances, of course — particularly compared to other types of assets. There's the issue of storage, for one, and on top of it, you may want to insure your gold as well. This is especially true if you've bought a large amount and want that investment protected.

Did you buy physical gold recently, or are you considering gold investing in the near future? Below, we'll break down what to know about insuring your investment.

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How to insure physical gold

According to Ben Nadelstein, head of content at Monetary Metals, insuring your gold may not be necessary if you only have a small amount. "For those storing small amounts of gold at home, the difficulty and expense of obtaining insurance often outweighs the benefits," he says.

If you have a good amount of gold, though — or losing your gold would mean a big loss (financial or otherwise), then insurance coverage is critical. 

"Insure it just like you would other collectibles," says Eric Elkins, CEO of Double E, an insurance and financial solutions firm. "Gold is a strong metal, but it doesn't float, it can melt down in a fire, and it's a desirable item for thieves. At the end of the day, if you would be upset or very disappointed if you were to lose your gold for whatever reason then you should probably insure it."

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Your gold investments likely won't be covered as part of your general home insurance policy, but it depends on the exact coverages you've chosen.

"You might be able to add it to your collectibles portion of your homeowner's policy but confirm you are receiving adequate coverage if you were to ever file a claim," Elkins says. "A lot of carriers will write a separate policy for just your gold or precious metals."

You also might need to get a rider for your policy — an amendment that extends coverage to a specific, named item (like gold) that is excluded from your general coverage. 

"There are also specialty insurance companies that insure precious metals," which can be another option to explore, says Stephan Shipe, owner and investment advisor at Scholar Advising.

Whichever route you choose, Elkins says you'll likely need to provide your insurer with some documentation to get your gold covered.

"Insurance carriers will either want the client to send pictures of the gold or submit an appraisal to justify the value," Elkins says.

How much does it cost to insure physical gold?

Many factors can go into the cost of gold insurance, including the amount of gold you're covering, how secure your home or storage facility is, and other risk factors. 

Generally speaking, though, experts say it usually runs anywhere from 0.5% to 2% of the gold's value per year, Shipe and Elkins say. So, for $10,000 worth of gold, you could expect to pay between $50 and $200.  

If you need help determining how to best insure your gold investments, talk to an independent insurance agent. They can help you make the best moves for your portfolio. 

A hands-off option 

If you don't want to go through the hassle of insuring the gold yourself, you can think about using professional storage for your gold investments rather than holding the gold at home. These locations will often come with included insurance.

"Gold owners who opt for private storage, usually with a professional vaulting company, pay recurring vaulting fees, but insurance is usually included in those fees," Nadelstein says. "Companies that lease your gold usually provide free storage and insurance while the metal is being vaulted or on lease earning you interest."

At the end of the day, though, Shipe says it's "important to determine what you're insuring against," as this will point you toward the best path forward.

"If you are insuring against theft or fire damage, these risks may be easier to mitigate by holding the gold at a vault or safe deposit box instead of your own home," Shipe says.