Your Exquisite Guide to Jewelry Insurance Options
Imagine that after a long year full of hard work, you and your family finally get to go on the vacation you have been saving for. You spend days relaxing, having fun, and being a family, and you created memories that will last a lifetime. At the end of the vacation, you are happy that you came but also ready to get back to the comfort of your own home. You pull up in your driveway, expecting to go inside, drop your bags, and rest, but life has a surprise in store.
You walk into your home and realize that you’ve been burglarized while you were on vacation. Your TV is missing, some music equipment, some other electronics, and all of the contents of your jewelry box.
You find yourself overwhelmed with emotion. You feel violated, hurt, angry, and probably afraid. What if the burglar is still in your home? What if they come back? Who would do something like this?
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Sadly, this is not a rare incident. In fact, the FBI reports that a burglary occurs about every 26 seconds in America. That’s more than two a minute or over 3,000 each day. That is a higher number than any of us are probably comfortable with. And, truthfully, this traumatic event is no respecter of persons. You don’t have to be wealthy to be robbed. The thief simply needs to feel that you have something worth taking, and most of us have at least a few electronic devices and other valuables. This fact makes most of America a target.
The good news is that we can take preventative measures to reduce the chances of this happening to us, such as security systems and even guard dogs. Truth be told, even having a security system sign on your lawn or window can help. You might not have one, but most burglars are not willing to find out the hard way. They would much rather take the path of least resistance.
While these measures can help, they are not guaranteed. There is still a chance you might be the victim of a burglary. The question at that point is how are you going to bounce back from it. And this, my friends, is where insurance comes into play.
What Exactly Is Jewelry Insurance?
Jewelry insurance is additional coverage for your valuable jewelry that exceeds your standard coverage limits. Many homeowners believe that their home insurance policy will cover their jewelry if something happens. Up to the coverage limits, they are typically correct. Unfortunately, they often find out too late that they simply do not have enough coverage for their jewelry. Your homeowner's insurance policy will typically cover some loss, but a standard policy is limited when it comes to coverage amounts and the events that it covers.
Most policies cover only about $1,000 to $2,000, and this is almost never enough for valuable jewelry.
If that amount already seems small enough, chances are it will actually get smaller. Many policies provide that limit to cover all items lost due to theft. This means that your coverage is usually spread out to cover electronics and personal belongings in addition to the jewelry.
Additionally, a standard home insurance policy certainly does not cover all potential losses. For instance, if you simply lose jewelry or it gets stolen from your hotel room while on vacation, a basic policy likely will not cover either loss. However, it typically covers theft at your home and things like fire and storm damage.
Do I Really Need Jewelry Insurance?
Like all other financial questions, there is simply no one answer for everyone. Whether you need jewelry insurance depends on three basic things: What type of jewelry you own, how much it’s worth, and how much you can afford to spend, replacing lost, stolen, or damaged items.
To help you decide if you need additional insurance for your jewelry, take out your insurance policy. Take a good look at what it covers, how much it covers, and whether that coverage is for all damaged or stolen belongings. Then, answer the following questions:
- How much is my jewelry worth?
- Do I have enough coverage to take care of all of my electronics, personal belongings, and jewelry if something happens?
- Do I have enough money put away to cover any additional costs?
If the answer to the last two questions is “No”, jewelry insurance is a really good idea.
It basically comes down to this: If all you have is some costume jewelry or a few things that are valued at a few hundred dollars, your standard policy is probably enough. However, if you have an engagement ring, wedding ring, or an heirloom from your grandmother that is worth thousands, you need some extra coverage.
Are There Alternatives to Jewelry Insurance?
Of course, jewelry insurance is not mandatory. It is completely up to you. However, if you do not have it, you are faced with two options should your jewelry be lost, stolen, or damaged:
1.) Replace it out of pocket.
2.) Face living without it.
Unless you just don’t care about the jewelry, option 2 is definitely unfavorable. Option 1 is doable if you can put the money to the side and leave it completely alone- or if you make enough on a regular basis so that the cost of replacing the jewelry will not cause you any stress.
This will, of course, depend on the value of the jewelry. Replacing a ring valued at $1,000 may not be too troublesome for some, but most of us cannot afford to replace a $15,000 ring. So whether or not you can replace it out of pocket comes down to your own situation. In most cases, it is more beneficial to pay for jewelry insurance.
Understanding Insurance
While this article is specifically about jewelry insurance, it is important to have a good understanding of insurance, in general, to fully understand the different types of coverage.
What Is Insurance?
Insurance is an agreement between you- the insured- and your insurance company. The insurer offers to help cover losses for certain covered events if you meet certain requirements. One of the requirements is, of course, making your insurance payments.
Other requirements depend on the type of insurance you have. For instance, most health insurance companies require that you get a medical check-up done prior to insuring you. Your insurance agent will tell you exactly what is required.
How Does It Work?
When you purchase insurance, you will receive a copy of your policy. That policy will specifically lay out what events are covered, how much is covered, and other terms. If a covered event occurs, you should be able to file a claim after which the insurer will cover the costs incurred up to your coverage limits.
We’ll simplify using our burglary example. Let’s say that you have a home insurance policy that does cover losses due to theft and your coverage limit is $5,000. This means that once you file a claim for the items that were stolen, your insurer will reimburse you for the cost of those items up to that $5,000.
Usually, there is a deductible that you have to pay, but we’ll talk more about that in a bit. For now, let’s talk about coverage limits. What happens if the value of the items stolen adds up to more than $5,000?
In short, you have to cover the rest. So if your stolen electronics and jewelry will cost $7,000 to replace, you will have to take care of that additional $2,000- unless you have additional coverage or floaters. Fortunately, there is extended coverage and floaters- add on policies- available for just about anything you wish to insure. One of these is jewelry insurance.
Cost of Jewelry Insurance
Now, let’s get back to our topic. The cost of insurance is often one of the biggest factors in determining whether or not to get it, and for good reason: No one wants to spend money on things they do not have to. Fortunately, jewelry insurance is pretty fair. The rates are most often about 1-2 percent of the value of your jewelry.
This means that if you are insuring a $10,000 necklace, you will likely pay between $100 and $200. That’s really not a lot for the peace of mind it provides. And it definitely will not seem like much if you ever discover that necklace missing.
What Are My Jewelry Coverage Options?
Like a sub sandwich or a hamburger from your favorite restaurant, insurance policies come with different toppings for you to choose from. Not all jewelry policies cover the same thing, so you have to pick and choose your own toppings.
Ideal jewelry coverage takes care of the full value of your jewelry when you suffer a loss due to theft, damage, accidental loss, and mysterious disappearance. You probably understand theft and damage, but what exactly are “accidental loss or damage” and “mysterious disappearance”?
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Accidental loss or damage” refers to- well- accidentally losing or damaging your jewelry. Maybe you accidentally dropped your ring down the sink and turned on the garbage disposal, or maybe you lost your necklace when you were swimming in the ocean. These were events you are responsible for but that you did not do on purpose.
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Mysterious disappearance” means that the item is gone but you don’t know how. Let’s say that your grandmother gave you a very special bracelet- too special to wear all of the time and risk losing it. You keep it put away and only take it out on special occasions.
Now, a family wedding is coming up and you want to wear the bracelet, so you open your jewelry box and find it’s gone. The last time you saw it was when you visited your grandmother on Christmas and you are sure you put it back in the jewelry box- well, at least you are pretty sure you did. So what happened to it?
Maybe it fell off your arm and you did not notice. Maybe it was stolen when you hosted that last neighborhood party or let your cousin from out of town spend the week at your house. This would qualify as a mysterious disappearance. It’s gone but you have no clue how. Having this protection has saved many heartaches over time.
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In addition to the types of events you want your policy to cover, you should also consider where the protection is valid. As mentioned earlier, most standard homeowner’s policies do not cover losses away from home- though some will provide a percentage of your coverage limit for international events. Separate or additional jewelry insurance, on the other hand, typically provides full coverage no matter where you are.
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Replacement cost value, or RCV, is when your insurer pays the full price of replacing the item without any depreciation factored in. Actual cost value, or ACV, is when the insurer pays out the value of the item minus depreciation. Be sure to look for a coverage that provides replacement cost value
How to Obtain Jewelry Insurance
There are a couple of different ways to get coverage for your jewelry and a couple of policy types to choose between. Let’s start with the most basic: Where to get it. If you have homeowners- or even renters- insurance, you can just add more coverage to your current policy. This is known as a jewelry floater.
You can also purchase it from a separate insurance provider, but you usually save money when you bundle coverage with your current provider. Don’t just assume that’s the case, though. Just like you should take time to compare car insurance and health insurance options, you should do the same with jewelry insurance. Get several quotes before deciding on a provider.
You can also choose between a blanket policy and scheduled personal property. A blanket policy means that you purchase a set amount of additional coverage. For instance, you add an additional $5,000 in coverage for all of your property.
Scheduled personal property means listing individual items and insuring those specific listed, or “scheduled” items. Let’s say, for instance, that your current policy provides blanket coverage for all of your jewelry up to $2,000, but your engagement ring is worth $4,000.
Your best bet is to schedule your engagement ring even if you let your standard home policy cover the rest of your “unscheduled” jewelry. Most insurers require an appraisal of the item you want to schedule.
Choosing Premiums and Deductibles
Before we finish up, let’s take a minute to talk about premiums and deductibles. These are often confused and misunderstood terms, but knowing what they mean is essential to choosing the best insurance coverage.
Premiums
In short, premiums are your monthly insurance bill- or however often you make a payment to your insurer. Those regular payments are your premiums.
Deductibles
Deductibles are the amount that the insured has to pay in order for the insurer to pay for the rest of it. We’ll say your policy has a $5,000 coverage limit with a $500 deductible. If your $5,000 ring gets lost, stolen, or damaged, your insurance will cover it. However, you must first pay that $500, and then the insurer will provide the other $4,500.
When you are purchasing insurance, you have to choose your premiums and deductibles. What this means is that you are deciding how much you are willing to pay each month as opposed to how much you are willing to pay for a covered loss. Your choices fall into two basic categories. You can either:
Pay a higher monthly bill but pay less out of pocket if your jewelry is lost or stolen.
Or pay a lower monthly bill and more if something happens to your jewelry.
There are a couple of things to point out here. First, most jewelry floaters do not require a deductible. This means that if you are simply adding on protection, you may not have to pay anything out of pocket. Be sure to check with your insurer first, though, as not all floaters are this way.
Second, “out of pocket” does not necessarily mean you have to provide the cash yourself. With many insurers, they will simply take your deductible out of what they are going to pay.
Basically, if you need to replace your $5,000 ring, a $500 deductible often means that they will just pay you $4,500. Ask your insurer on specific details of how claims payments are processed to be sure.
Tips for Protecting Jewelry
No one can prevent every bad thing from happening or foresee every potential issue with jewelry. However, these steps can help.
Know It's Worth
Knowing how much your jewelry is worth is critical. You want to be sure you get enough coverage. At the same time, you don’t want to pay for insurance you don’t need. Have any jewelry you want insured appraised to get an accurate value.
You should not just get it done once, though, as the value can change over time. Have it reappraised on a regular basis to keep the right amount of protection. Professionals recommend doing so every two to three years.
Keep Documentation
It is essential to keep good records. Always keep a copy of receipts of purchase, receipts of any work done, appraisals, and pictures of the jewelry. This helps to ensure a more successful insurance claim if you ever need to file. It also helps if you ever decide you want to sell or pass the jewelry onto someone else.
Do be sure that you keep this documentation safe. It is best to keep digital copies that you can access quickly as well as hard copies that are stored in either a fireproof safe or a safety deposit box at your bank. Otherwise, the documentation will do you no good in the case of theft or fire.
Keep It Safe
The best way to protect your jewelry is to take measures to prevent damage, theft, and loss to begin with.
Keep it in a secure safe in your home or safety deposit box at your bank.
When you go on a trip, consider leaving it all at home or- at the very least- only take what you can keep on you. Carrying around a box of diamonds is asking for trouble, especially since tourists are often easy targets for thieves.
If you are flying or going on a cruise, don’t store your jewelry in your luggage. Keep it with you.
Conclusion
Jewelry insurance may not prevent bad things from happening to your jewelry, but it can definitely minimize the impact that a loss can have on you. If you have valuable jewelry that you want to protect, consider purchasing additional coverage.