You just got back from the jewelry store and you realize that you just spent more money on an engagement ring than you spent on your first car. What happens if you lose it? Or, what happens if your (hopefully) soon-to-be fiancé loses it? Do you have jewelry insurance?
“Nah, it won’t get lost because it’ll never leave their finger.”
What if it gets lost in the sandy beach on your honeymoon? Yes, that has happened to one of my customers and their insurance replaced the ring. What about if a prong breaks and the stone falls out without being noticed? Yes, that’s happened too, and we covered it. What if you get mugged? Unfortunately, this happened to a customer and their insurance policy paid to replace the ring.
There are many things that can happen to a piece of jewelry, especially one which is worn every day. It’s a good idea to know your options for insuring it.
PROPERTY INSURANCE POLICIES
Many people seek to insure jewelry with their property insurance policy (i.e. Homeowners, Condo, Renters, etc.). There are a few things to be aware of when doing this. If you make no adjustments to the policy, jewelry most likely has a low coverage amount. In many cases it’s $1,000 but it could be different on your policy. The other major thing to know is that most property insurance policies cover personal property, which jewelry would be considered, on a Named Peril basis. This means that personal property is only covered for the things that the policy specifically says are covered. For example, most policies would cover theft as a Named Peril but would not cover if you lost the ring. So, from the examples above, if you were mugged, you might get $1,000 from your insurance but if you lost the ring in the beach sand, you’d get nothing. If you’re okay with this type of coverage, there’s probably no need to make any changes to your policy.
INCREASING YOUR JEWELRY INSURANCE COVERAGE LIMIT
If you’re okay with the Named Peril coverage mentioned above but the coverage limit (often $1,000) just isn’t enough, many policies allow you to increase this coverage limit for an additional premium. There is typically no appraisal required to increase this coverage because it’s not tied to a specific piece of jewelry. It would likely cover all of your jewelry under the increased jewelry coverage limit.
Many of our customers are not comfortable with Named Peril coverage for their expensive jewelry. They want Open Peril coverage which means that, unless the policy specifically excludes the cause of loss, it’s covered. This is a much broader level of coverage. It covers things like mysterious disappearance and breakage among many other causes of loss. When you schedule jewelry, the insurance company will likely want an appraisal or purchase receipt up front to validate the amount of coverage as well as to have a description of the item on file in case there is a future claim. The engagement ring (or other piece of jewelry) is specifically listed and itemized on your policy or scheduled as we call it in the insurance biz. There is a separate premium associated with each piece of jewelry.
There are many ways to insure your engagement ring. Unsure which option is best for you? Let’s talk through your options and find the right coverage for you. For more information, please reach out to me at www.lofrumentoagency.com/contact-us/.
John Lofrumento, CFP®, FSCP®, RICP®
President, The Lofrumento Agency
Clifton Park, NY / Ballston Lake, NY