My experience with insurance - any insurance - is that there always seems to be something about my coverage that I didn't understand. Fact is that if you own jewelry, you probably want it insured - it's relatively easy to damage and it's small so it can be relatively easy to lose or for someone to steal. Your 2 basic options are adding a jewelry rider to your homeowner's or renter's policy or purchase completely separate personal jewelry insurance policy. The trick is make sure that your policy covers actual replacement value. You don't want to be under-insured (you won't be covered in full if you make a claim) and you don't want to be over-insured (your premium is tied to the amount the item is insured for so you will be paying unnecessary premiums for no additional coverage). Here are some of the more common questions we get...
Do I choose who replaces my jewelry when I make a claim?
Unless there is a clause in your policy indicating you can go to the jeweler of your choice to have your item replaced or repaired, your insurer will likely choose the jeweler. Basically insurers calculate their premiums based on the assumption they will pay less to replace the insured item than you will because of their volume buying power. In your lifetime, you may buy one item, or two, or four, or six. Your insurance company buys hundreds every month. They expect, and receive, volume discounts from their suppliers for the items they buy. There are jewelry-specific insurers like Jewelers Mutual that sell personal jewelry insurance that allows you to choose your jeweler. It's worth comparing the cost of putting a rider on your homeowner's or renter's insurance versus getting a policy from a company like Jewelers Mutual. If you're curious about personal jewelry insurance check out www.jewelersmutual.com/Personal-Jewelry-Insurance.
Will I need an appraisal?
You will likely need a jewelry and gemstone appraisal to add a rider for more coverage on your homeowner’s insurance or for a new policy specifically for your jewelry pieces.
Jewelry items that are insured through a rider on your homeowner's or renter's policy usually don’t appreciate so it’s a good idea to have your items reappraised every three to five years. Otherwise, if you have the misfortune of damage or loss of an item whose market value has increased, you may be stuck with a replacement value that may not cover the cost to repair or replace it.
You also want to ask prospective insurers if they ever depreciate the values of insured items and on what basis. In this situation, you’ll want to avoid paying premiums for items based on outdated values higher than current market value.
What will your policy cover?
Some policies may be “all risk,” meaning they cover a wide range of incidents. Other policies only cover “Named risk” that only cover specific incidents. So make sure you know what kind of losses are covered so you don't have a really bad surprise if something unusual happens to your jewelry. Damage, loss, and theft are the most common risks covered, but other things like “mysterious disappearance” are covered by some policies. For example, if your insured items turn up missing and you have no idea how that happened, or even when it happened, your insurer could consider that a mysterious disappearance instead of a theft. If your policy excludes mysterious disappearance you won’t be covered. Some other situations to consider are for things like are you covered if you loan your jewelry to a friend or child and the pieces are lost or damaged or if your jewelry consists of pairs or sets (such as earrings, wedding bands, or other ensembles) will your policy replace the entire set if one item is lost or damaged.
Can I get cash instead of replacing my jewelry?
If you’ve insured an item and are paying a premium based on its replacement value, you will likely not get the replacement value in cash. If your policy has a cash-out option, it will likely be significantly less than the replacement value. Cash value insurance is a more expensive and an uncommon option on riders but will give you the most flexibility to choose how your pieces are repaired or replaced.