How Does Jewelry Insurance Work?

Imagine your favorite piece of jewelry disappeared or got destroyed beyond repair. How would you be feeling?

·         Heartbroken for sentimental reasons?

·         Crushed because there was no feasible way you could afford the cost of a new one or repair it?

·         Hesitant to wear or purchase fine jewelry again?

If you answered “yes” to some or all of these questions, jewelry insurance may be worth purchasing.

Jewelry insurance covers your jewelry when it has been damaged or stolen. Some policies also cover lost jewelry. Following is a collection of choices to assist you in your search for the right jewelry insurance for you.

Jewelry Insurance through Your Home Insurance

If you have homeowners, renters or condo insurance, those policies likely include some amount of coverage for jewelry - and more coverage may be available if you need it. Here’s how it works.

Personal property protection on a regular policy

Jewelry is covered by traditional homeowners, renters and condo insurance, and falls under the personal property section of your policy (just like the shirts in your closet or the couch in your living room).

These policies usually protect your stuff from theft and fire. But they typically won’t cover issues that aren’t included on the policy - for example, manufacturer defects or dropping your wedding band down a heating vent. And they typically won’t cover damage caused by floods or earthquakes, either.

There are some disadvantages to having your jewelry covered under your homeowners or renters’ policy.

·         For one, there may be a limit on what the insurer will reimburse you for stolen jewelry, say $1,500. So if you own jewelry that exceeds that value, your coverage may not be adequate.

·         Second, the insurance company will deduct your deductible from any claim payout. So if someone swipes your $1,500 bracelet, and you have a $1,000 homeowners insurance deductible, you will receive just $500 from your insurance company.

·         Lastly, a claim on a stolen or damaged piece of jewelry can result in increased policy premiums.

Consider this if: You have very little jewelry or the pieces you have aren’t valued above your policy’s jewelry sublimit.

If your current policy’s jewelry limit is insufficient to protect what you have, you may be able to purchase one of the below types of additional coverage from your homeowner insurer.

Blanket coverage

Blanket coverage increases the cap on what your policy will pay for a certain kind of valuable, like jewelry.

For instance, while the standard policy could cover just $1,500 for stolen jewelry, if you layer in blanket coverage, the coverage limit might increase to $5,000 or higher. Per account limits may also exist.

Depending on the insurer, blanket coverage might also broaden what your policy will pay for, such as situations when jewelry is lost or misplaced. Some companies give blanket coverage, with no deductible.

Consider this if: You have a jewelry collection, but none of the pieces are particularly valuable.

Scheduled personal property coverage

When you “schedule” an item of jewelry, you are purchasing specific coverage for that item. You may have, for example, nothing of value in the way of jewelry but your $5,000 engagement ring. Rather than purchasing blanket coverage for a collection you don’t own, you only need to insure the ring.

Unlike with a standard homeowner or renters policy, coverage for scheduled personal property may apply if you, for example, lose a bracelet while traveling or drop a ring down a drain. There’s often no deductible.

You might need to provide an appraisal (a professional estimate of the item’s value) to purchase this coverage.

Consider this if: You have one or more individual pieces that are worth more than your homeowner’s policy’s cap for jewelry.

Jewelry insurance from a specialty company

The companies that specialize in insuring jewelry typically provide broader coverage than your homeowners’ (or renters’) insurer.

For instance, these could include preventive maintenance like stone tightening or a clasp change. They have also paid out for jewelry lost in a flood or an earthquake.

Many stand-alone jewelry policies cover your items on an “all risks” basis, which means they pay for damage from just about everything except the things that are specifically excluded. Here are a few events that jewelry insurance is often unlikely to cover:

·         Defects in the manufacturer.

·         War or nuclear perils.

·         Wear and tear.

·         Damage caused by vermin such as rodents.

·         Loss or damage caused by any deliberate act.

Purchasing a jewelry policy from a specialty company means if you have a claim, your homeowners or renters insurance won’t become more expensive.

A number of these policies are “repair and replace” policies which reimburse your jeweler after a claim. That can be a good option to have if you know you want to replace a lost piece, but repair-and-replace policies offer less flexibility than a cash payout.

Get this if: You don’t want your home insurance rates to be affected by jewelry claims and you intend to buy subsequent pieces if lost or stolen.

What is the cost of jewelry insurance?

Every stand-alone jewelry insurance policy (policies sold separately from homeowners’ insurance) I researched charged 1% to 2% of the value of each item. There are several factors that can impact the cost of a policy are:

·         Your location.

·         The amount of property you are insuring, as well as the value of individual pieces.

·         The deductible.

If the policy will reimburse you for actual value (the cost of the lost item, minus depreciation) or replacement value (the cost to replace that item today). Third alternative In very few cases there can be a third way. Some companies allow you to insure heirloom pieces or other hard-to-replace jewelry on an agreed value basis, under which the insurer pays the amount specified in the policy.

You might get a discount on jewelry insurance by:

·         Owning a home security system.

·         Keeping the jewelry out of sight in a home safe or safe deposit box at a bank.

·         Register the jewelry with a third party, Gemprint or Forevermark.

There are also plenty of companies that will give you a quote for jewelry insurance online or over the phone. Once you have a quote, your policy can start whenever you make a payment. One option is that you produce an appraisal or a detailed receipt in order to get coverage.

How does jewelry insurance work?

The way that jewelry insurance works is fundamentally like other kinds of insurance.

You pay the premiums, and the insurance company pays you (minus your deductible) if something happens to your jewelry, like if it gets damaged or stolen. But what that looks like depends a lot on the specific terms of your policy.

To be sure you’re not in for any unpleasant surprises, it is important to know what is covered, and how your insurer will pay you.

While many insurance companies will say they will pay for “repair or replacement” if a piece of jewelry is damaged or stolen, make sure to find out exactly how those payments will be made. Ask the company:

·         There’s a load of jewelry insurance questions on your cover policy and it’s important to know the answer to them:– Will the policy pay if I’ve damaged or lost my jewellery by mistake?

·         If I give or receive jewelry as a gift, will the policy cover it?

·         Is my coverage different when I travel?

·         Will the insurer pay me the cash value of an item that I lost, or will it pay a jeweler to replace it?

·         May I select my own jeweler for repairs, or replacement?

·         If I have a custom piece of jewelry, will my policy pay for a custom replacement, or do I have to settle for something “like-kind”?

·         Is it worth it to have jewelry insurance?

Final Thoughts

In the end, it’s a matter of how much is your jewelry worth to you.

If you’ve spent a good deal of money on your jewelry, and it’s the type of jewelry that has strong significance, then buying insurance to cover your investment would be a smart thing to do.

But if you wouldn’t feel compelled to replace your jewelry if it were lost or stolen, insurance may not be worthwhile even if the item holds great value.

You may also want to take into account how frequently you wear your jewelry. A copy of a painting that you keep in a closet is far less likely to be stolen or destroyed than a sculpture you display in your living room. And an engagement ring that you wear every day on your finger is more likely to be misplaced or damaged than a diamond necklace that resides in a bank safe for years on end.