Jewelry Insurance - Different Options

Whether it’s a wedding ring purchase for the big day, or an expensive gift, jewelry is something that most of us own (or will purchase) eventually.

But, does your insurance policy cover jewelry loss for reasons other than theft – such as for lost or damaged items? In this article, I have covered a general overview of Jewelry Insurance and why it is necessary.

Generally, jewelry can be insured in following two ways:

  • Homeowner Insurance
  • Jewelry Insurance

Jewelry Covered under Homeowner Insurance Policy

Typically, your homeowner’s policy will cover jewelry as well, but only to a certain amount. Like many aspects of insurance that aren’t fully understood by the insurance-buying public, there are few hitches associated with it.

Consider following example:

Mrs. X notices that a piece of diamond from her $5,000 engagement ring has fallen out of the setting. She is completely unaware of when this happened, so she calls her homeowner insurance company and is told the following:

  • Jewelry is covered under her policy, but up to a limit of only $1000.
  • Jewelry insured at this limit is only covered against items such as fire or theft only.

In the above example, since the ring wasn’t stolen and just a diamond was lost, Mrs. X finds out that the policy won’t pay as the nature of the loss is classified as a "mysterious disappearance".

Most home contents insurance only covers jewelry to a limited amount. On the contrary, most engagement rings and wedding rings far exceed those amounts. So, to be covered properly you will need jewelry insurance. Each piece will have to be listed individually which may seem tiresome but will benefit in the long run.

Riders – This is additional insurance that is bought along with homeowners policy to cover certain items that otherwise might be uninsured. Jewelry, especially engagement rings, often falls under this category. It is, in effect, a separate policy for that item issued by the same company at the same time. A common strategy is to select the most expensive items from your wardrobe, especially anything over the single item limit in the homeowners’ policy and buy a rider for those items.

Jewelry Insurance Policy

Jewelry Insurance can be offered by same company as homeowner insurance or by specialist jewelry insurance companies. Normally, annual premium comes out to be in the range of 1% - 2% of value of item to be insured.

You are covered for loss, theft or damage of jewelry at your home and also on your travels. This should also include international travel but you still must file a police report when abroad. In the event of damage you can opt for the piece to be repaired or replaced.

If the insured item is an antique and cannot be replaced then it will be repaired or full insured value will be given. A standard home insurance policy may not be as generous.

So, if you have a jewelry item that is valued high, then you should go with jewelry insurance (instead of homeowner insurance) option.

Estimated annual premium for personal jewelry insurance policy is determined by:

  • Retail replacement value of each jewelry item to be insured.
  • Deductible (amount that must be paid out by policy holder before an insurer will pay any expense) for each item.
  • Residence location of the person who wear the jewelry.

Additional Coverage

If you have a pair of earrings, or any item of jewelry that comes in a pair, if damage is suffered to one part you normally are inadequately covered. As an additional cover you should ensure that all pairs should be replaced in the event of theft, or damage to just one of the pieces.

Jewelry insurance is based on the accuracy and completeness of your declaration of jewelry assets to the insurers. Make sure you are fully insured by being as honest and as thorough as possible.

Types of Jewelry Insurance Policies

Following are the 2 types of jewelry insurance policies:

Replacement

This is the most common type under which insurance company agrees to pay for replacement or repair of property. If the claim is filed, company will refer you to a local supplier who will replace/repair your jewelry piece based on the description that was mentioned in original policy.

Policy-holders have right to choose his/her own supplier, but company will only pay the amount that would have been necessary to pay their chosen source. Similarly, if policy-holder gets the replacement/repair done at lesser cost from the self chosen supplier, company must pay the difference in amount to the policy-holder.

Defined Value

In this type, agreement is made between insurance company that how much will be paid in case of a loss (total or partial). If there is total loss then company will pay the full defined value. In case of partial loss (e.g. lost stone), payout will depend on policy details, but the most common approach is for the company to pay for repairs using a supplier of their choice.

Things to do before purchasing Insurance Policy

  • Get your jewelry appraised: Ensure that each jewelry item is listed, described and valued on paper. Remember to take pictures and keep detailed receipts and ensure your jewelry appraisal has detailed and accurate description of jewelry item.
  • Certified Diamond: In case of diamond jewelry, ensure that you have certified diamond. As, just having appraisal done without diamond certificate could be a problem. Otherwise, at the time of claim, insurance company might attempt to replace your original diamond with a lower quality diamond.
  • Check your current homeowner’s insurance policy: Find out the amount of coverage your current insurance policy provides for jewelry. Ideally, it should cover theft, loss and damage as well.
  • Call your Insurance Agent: Ask what type of coverage you have, and ask for a quote to schedule your jewelry for the appraised value. You may have options to choose a higher deductible to lower the premium (similar to car insurance).
  • How the insurance company will replace the jewelry – with money? Or will you be required to purchase a replacement through a specified jeweler?
  • Compare Insurance Plans: Choose the plan that gives you the most coverage for your money and the most flexibility if you have to replace jewelry. Check what is and what is not covered and accordingly make decision that best suits your need.
  • Ask about Discounts: Just like you receive a discount for insuring your home & car together, some insurance companies add additional discounts the more policies that you have with them!
  • All jewelry should be inspected on a regular basis for reassessment of value. If your jewelry is not valued appropriately, you will not be able to recover what you need to replace it if it is lost, damaged or stolen.

Finally, don’t forget to get your jewelry insured and be sure your insurance covers damage and loss. After all jewelry is quite an investment and taking care of this investment is very important.

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