For many people a diamond ring is one of the biggest purchases of their lifetime, so it is important that you protect your investment. One of the most popular ways to protect your investment is to insure your diamond. Please note that I am NOT an insurance agent so please check with your own insurance agent about all the issues which I am going to describe to you. Also, policies may differ in different states.
You might be surprised to learn that your homeowner’s or renter’s insurance policy probably does not offer full coverage for your engagement ring and other fine jewelry. Your insurance policy probably covers jewelry theft, but not loss that occurs for other reasons.
Typical Insurance Policies
Renter’s and homeowner’s insurance policies set limits for the loss of certain categories of personal property, including jewelry. Homeowner’s policies typically pay a maximum of $1,000 for jewelry theft. A renter’s insurance policy might have a lower limit for jewelry loss–$500 is common.
Does your insurance policy cover jewelry loss for reasons other than theft–such as for lost or damaged items? Read your policy carefully and ask your insurance agent to clarify the types of losses that are covered on your standard policy.
Additional Jewelry Insurance
You can usually purchase additional insurance for your fine jewelry, otherwise know as “scheduled personal property,” but be sure to ask your agent questions so that you have a good understanding of the coverage:
- Is there a deductible? If so, how much is it and how does raising or lowering the deductible affect your policy costs?
- Is an appraisal required prior to obtaining insurance? Are there only certain types of appraisers whose reports are accepted?
- Are the items covered no matter where the loss takes place? Would the policy cover you for a loss that occurs during domestic or international travel?
- Are items covered for full replacement cost? Must you replace the item, or can you obtain a cash settlement?
- Does the policy cover repairs to damaged jewelry?
- Actual Cash Value, in which the insurance company will give you the actual market value of the diamond in order to replace it.
- Agreed Value, which is a very rare type of policy, in which the insurance company and you the owner, will negotiate on the proper value of the diamond ring or stone.
- Replacement Value, which is the most common of the three. This is where the insurance company will reimburse you up to a specific amount agreed upon by the two parties when the policy was created. For instance, with a replacement value policy, if you spent 10K on a diamond ring, and the appraiser has confirmed the ring is worth 10K, the insurance company will insure you with a replacement value policy of up to 10K. If the ring is lost or stolen in the future, the insurance company will usually pay up to 10K for the ring.
In order to have your ring insured, you will first need to have it appraised and to send a copy of the professional appraisal to your insurance agent. Besides an appraisal, your insurance agent may request photos of the ring and stones and possibly a gem print which is a computer scan of your diamond ring which makes it easily identifiable if it is stolen. If you are planning on buying a diamond ring or own a diamond ring that is extremely valuable, think seriously about getting insurance.
In the meantime, until next time, Mind Your Diamonds!