Understanding Insurance Options for Fine Jewelry

Few things are more exciting than slipping a diamond engagement ring onto your beloved’s finger.  The only thing that might top it is being the one on the receiving end.

It’s one of the most momentous occasions in a person’s lifetime, and believe it or not, it’s also a great time to take a good look at your insurance coverage.  Do you have what it takes to protect this significant addition to your jewelry collection?

Standard homeowners policy coverage

Standard homeowners insurance policies typically include protection from theft and other named perils for your personal possessions. The amount varies but typically is between 50% and 70% of the cost it would take to rebuild the structure of your house.

However, there typically is a sublimit for jewelry and other high-value items. The sublimit can be as low as $1,500 and typically tops out at $2,500. There also likely is a deductible that must be met before that coverage even applies. This means that even though you have, for example, a $100,000 limit for personal possessions, only the sublimit applies in the event that your ring is stolen. If your $5,000 ring is stolen and your theft sublimit is only $2,500, your homeowners policy won’t be much help.

What to do?

If your standard homeowners policy isn’t adequate to cover your jewelry, you can:

• Add a scheduled personal property endorsement to your existing policy OR
• Purchase a personal articles floater

A scheduled jewelry endorsement can be added to your existing homeowners policy. It adds special limits for scheduled items. These items are listed separately with a value attached to each and are given more coverage than a standard policy offers. Insurance companies typically require an appraisal or purchase receipt to verify value before adding coverage.

A personal articles floater is a separate policy, usually purchased from a company that specializes in coverage for high-value items.  It generally has no deductible.

Endorsement or floater – which is right for you?

The primary differences between a scheduled personal property endorsement and a personal articles floater are policy premium and coverage.

Insuring your valued jewelry via a scheduled endorsement is typically considered the more cost-effective route. Even though your homeowners premium will increase, it’s still usually cheaper than purchasing an additional policy. However, keep in mind that the items covered by the endorsement are still subject to the policy coverages and exclusions; while floaters generally include all-perils coverage.

Standard home insurance policies typically cover fire, lightning, tornadoes, windstorms, hail, explosion, smoke, vandalism and theft. Accidental loss and accidental damage, on the other hand, are usually excluded. That may not be an issue if your valuable jewels are stored in a bank vault, but if you’re like most people, you like to wear yours, especially your engagement and wedding rings.

Have you ever lost the stone from your engagement ring or dropped diamond earrings down the drain? What about that time you forgot to take off your watch before a swim in the ocean and it was carried off in the waves? When those things happen, the accidental loss and damage coverage offered by a “floater” policy comes in handy and can save you thousands of dollars.

Some tips for insuring your jewelry:

DON’T assume your jewelry is fully covered on your homeowners policy.

DO install a home security system to your home. Not only will it help prevent theft, it may also help you get a discount on your homeowners premium.

DON’T add new items to your collection without alerting your agent.

DO itemize. Take the time to write out a list of all your valuable jewelry with a brief description and the value of each item. Whenever you acquire something new, make it your number one priority to add it to this inventory and alert your agent right away. Be sure to include current appraisals (acquired within the past 3-5 years).

DO create a photo and/or video inventory. In addition to your itemized list, create a visual inventory to keep on hand in case you ever have to file a claim. Take photographs and/or video of your entire jewelry collection and store it electronically so you can access it from several locations. Include receipts and appraisals in case the hard copies are destroyed or lost. Again, remember to add any new jewelry as soon as it is purchased!

Take the time to make sure your jewelry is properly insured so you can rest easy and enjoy it for years to come.

This article was written by Susan Orrell, who contributes to the HomeInsurance.com blog at http://homeinsurance.com . HomeInsurance.com is a resource center for insurance consumers and homebuyers across the country.