As the holidays approach and shoppers are busy picking up special gifts, it is time to give some attention to making sure you have adequate insurance for your personal valuables. Most items you purchase are receive a gift are covered as personal property under your homeowners or renters insurance. Therefore, your new flat screen TV, iPod, computer, golf clubs, sofa, or lamp is probably covered if your house or apartment is insured.
However, some articles (jewelry, coins, stamps, furs, firearms, and silver flatware for example) have limits to their coverage. Since my business is diamonds, I will focus on the jewelry category.
Most homeowners’ policies have a limit of $1500 to $2500 for jewelry per event. That means if someone breaks into your home and steals all of your jewelry, you only get the $1500 to $2500 limit of your policy. While most policies cover damage and theft, many policies do not cover accidental loss so if you lose your engagement diamond ring you might be getting nothing.
To adequately protect your jewelry items, you need to add a special rider to your standard policy. This rider, also called a schedule, typically required to provide a record of value that schedules the item’s coverage limit. For jewelry, an insurance appraisal is often required to accurately describe and value the scheduled item. Unlike most other property insurance, the scheduled property rider generally does not have a deductible. The scheduled rider provides coverage for loss, damage, and theft.
Unlike your sofa, whose value automatically inflates each year with most replacement types of homeowners’ policies, the scheduled property rider for jewelry limit of coverage stays at the value listed on the insurance appraisal. That means that if the value of your jewelry appreciates over time, the cost to replace your jewelry in the future could be substantially more than what you paid. Make sure your insurance coverage keeps up with the replacement value of your jewelry. Most insurance companies recommend updating jewelry insurance appraisals every 3 to 4 years.
The price of jewelry insurance varies by insurance company, value of the jewelry item, and geographic location but typically runs in the 1 to 2 percent of value range for annual premiums. We are amazed at the number of clients who do not get jewelry insurance, thinking they will save a few dollars in premiums. When something happens to their valuable diamond ring, they learn the meaning of “penny wise, pound foolish” the hard way.