Diamond may be the hardest natural substance on earth, but
loose diamonds and diamond jewelries are small, valuable and delicate. For this reason, it is extremely important to
make certain that your most valuable diamond jewelry such as your engagement
ring or wedding ring is fully insured.
Below you will find an outline of the insurance policies available;
their particulars; and the pros and cons of each.
Standard Homeowners/Renters Insurance
Most standard homeowners /renters insurance will cover your
diamond engagement ring or fine jewelry only in cases of break-in and theft or
natural disaster. Jewelry that you lose
or damage during daily activities typically will not be covered by a standard
plan.
Additionally, most standard homeowners/renters insurance
pays stolen jewelry claims based on their current market value at the time of
loss up to a specified limit which is called the “limit of liability”. This claim is paid up to this limit minus
your deductible.
Because jewelry is easily and frequently stolen, standard
insurance policies will typically provide very low limits of liability that
average around $1,000-$1,500 per item. This
means that if you file a claim for a diamond ring that whose current market
value at the time of loss is $3,000, your insurance plan will reimburse you
less than half of that. Or, say you
paid $900 for a pearl necklace 20 years ago that may only be worth $200 when
you submit your claim due to depreciation.
If your deductible is $200, you will not reap any benefits from your
claim.
Raising Limit of Liability
Some insurance policies allow homeowners and renters to
increase their coverage by paying higher premiums to raise the rate limit of
liability. This is the cheapest way to increase the coverage on fine jewelry
items.
However, raising the limit of liability does not mean that
the limit no longer exists. There may
still be a limit on the amount you can claim for the loss of each individual
piece, there is still a deductable and items are still covered according to
their current market value at time of loss.
Scheduling with Floater Policies
For a more complete coverage, it is recommended to
“schedule” each piece of your jewelry through what are called “Personal
Articles Floater” insurance policies.
Floater insurance policies will cover any type of loss whether it is an
accidental loss or damage. This means
that if you take your engagement ring off to wash your hands and it falls down
the drain, if you are swimming in a lake and your diamond falls out of its
setting into the depths of the water, or if your pearl earrings fall out of
your ear while you’re dancing at a party and are never to be found again, your
jewelry will be covered.
Floater policies also cover claims based on the listed value
for the item on the policy.
