28 Feb Jewelry Insurance: Be Proactive; Be Prepared
Several years ago I was the lucky recipient of a stunning 2.5 carat diamond ring. Like a newly engaged lady, I had mixed feelings of what to do to protect my shiny new rock. I went through the normal cycle of thoughts: I am never going to remove my ring. Should I remove it when I go swimming? What if I remove it and it falls down the drain. Wasn’t there a Brady Bunch episode about that? What if I’m mugged and the ring is stuck on my finger? What if I have two kids and they both want to inherit my ring?
This blog is not going to answer any of those questions, though I promise if you are having those thoughts, they are completely normal. What this blog will do is offer you some jewelry insurance basics and a few helpful hints on how to be proactive in protecting your engagement ring.
Questions, Questions, Questions
1) Do I HAVE to insure my diamond engagement ring?
No. Jewelry is not like a car or a home; there is no legal requirement to insure it. This is understandable – your car can harm people or property and a person can be injured in your home. A diamond ring? Well, even if you’re wearing the Hope Diamond, you’re jewelry is not likely to put anyone or anything in danger. The only risk of owning jewelry is of it being lost, stolen or damaged and in any of those cases, jewelry doesn’t HAVE to be replaced.
2) SHOULD I insure my diamond engagement ring?
There are a couple points to consider when determining if you should insure your engagement ring or not. How much is your ring worth? Is it rare, custom made or antique? Could you afford to replace it easily and would you definitely want to? How does the value of the ring compare to your deductible? In my case, my first engagement ring was a standard setting: several small diamonds on a band and worth about $2,500. The ring could be easily replicated, it didn’t have much sentimental value and it was relatively inexpensive so I didn’t insure it. When my husband upgraded my ring, he had our son hand select a diamond. Not only did the ring cost ten times more but sentimentally it was priceless. For me, by all accounts, my second ring was worth insuring. A trusted insurance agent can help you navigate these questions if you are not sure whether insuring a specific piece is the right choice.
3) Is my diamond ring covered under my homeowners policy?
Generally speaking, homeowners insurance has a limited amount of coverage for the contents of your home which would include your engagement ring. The caveat is that there is a max payout per item and the contents coverage has to pay for all your personal property. Let’s say your homeowners insurance includes $50,000 of personal property coverage with a max payout of $2,500 per item. If you have a major catastrophe in which your entire home is destroyed, that $50,000 would have to be used to replace your furniture, electronics, clothes, appliances, linens – there would not likely be much left of the payout to go towards your ring. Now, if instead you have an event that just happened to your diamond ring, (perhaps you dropped it down the garbage disposal) the most you would get after you paid the deductible is $2,500 because that is the maximum payout for any one item. A good insurance agent will help you decipher which pieces should or shouldn’t be insured.
4) How much will it cost to insure my diamond ring?
If you have determined that financially it makes sense to insure your engagement ring (or any piece of jewelry), you can expect to pay between 1 and 2% of the value of your jewelry as an annual premium. In simpler terms, for every $100, you will pay $1-$2 each year. For a diamond ring valued at $2500, the premium would be $25-$50 a year. For an engagement ring valued at $25,000, you can expect to pay between $250 and $500 a year for your premium.
5) How does the insurance company know the value of my engagement ring?
You are going to need to have an appraisal of your diamond ring, especially if you don’t have a receipt. A trusted jeweler can provide you with an appraisal or you can work with organizations like USA Gemological Laboratory (www.eglusa.com) or Gemological Institute of America (www.gia.edu). Take note that what an insurance company values an item at and what you get paid when you file a claim are not always the same thing. There is insurance lingo within the fine lines of your insurance policy that determines how claims are paid. Be sure to ask your agent whether the insurance company will replace your ring or will cut you a check – and if the latter, how will they determine how much you get paid.
6) Who insures the ring – the person who bought it or the person it was given to?
This is a great question and it really comes down to who owns the ring. When the ring is purchased, it belongs to the person who bought it. If they are going to hold on to the ring to propose at a much later date, that person should purchase valuable article insurance (if you’ve determined that the ring should be insured – see question 2). When the proposal happens, ownership is then turned over to the recipient. At that point, if the ring should be insured, the recipient will have to purchase their own insurance. Even if the couple lives together, if they are not a legal entity, the person who currently OWNS the ring is the person who currently INSURES the ring.
7) If my ring is damaged but still wearable, can I file a claim?
Potentially, yes! Let’s say you have a diamond ring that is appraised and insured for $30,000. One day you notice that there is a visible chip in the top of the diamond. Obviously the diamond can’t be fixed or made whole again but you can still wear it if the setting is stable. In this scenario, you could make a claim for diminished value. The ring would have to be reappraised and the new value subtracted from the original value would determine how much value your ring has lost. If the band was damaged (and not the gem), it could be repaired or replaced, bringing the ring back to its original appraised value. In this second scenario, diminished value would not be an option.
BE PROACTIVE and BE PREPARED:
- Keep a file for your jewelry containing: receipts, a copy of your insurance policy, appraisals, a close-up photograph of each item and any reports you have certifying your diamonds or gems.
- Plan to make an annual visit to your jeweler to have your ring polished and checked for wear and tear. A loose prong will eventually lead to a lost gem.
- Store jewelry that you wear often in a hidden safe at home and items that you rarely wear in a safe deposit box. (We all love to have a little antique jewelry box, but realistically, if you store anything but costume jewelry there, you are practically making a doggy bag for a thief to grab and go.)
- Limit how much jewelry you travel with. If possible, just go with what you can keep on your body at all times.
- Remove your jewelry when cleaning, cooking, gardening, working out, showering or applying lotion.
- Establish a few places where you will always put your ring when you take it off. You might have one ring plate on your bedroom dresser and one in your spice cabinet; choose spots where you know you will need to remove it most often.
If your current insurance agent is not willing to sit down with you and advise you on insuring your diamond ring or other pieces of jewelry, it’s time to find a new agent. Remember, not all jewelry can or should be insured; you are going to want a professional to navigate the options with you.
Here at Daigle & Travers, we can help you find the right coverage for your diamond engagement ring and all other jewelry policies. Give us a call today at (203) 655-6974 to learn more about valuable articles insurance. We have offices in Darien and Wilton but we serve over twenty states including New York, Connecticut and Rhode Island.