You just purchased an expensive diamond engagement ring and you wonder whether you should insure it? The short answer to this question is “absolutely!” You may find yourself spending as much money on a diamond as you would on a car, so it only makes sense that if you insure your car from loss or damage you should do the same with your diamond. In fact when comparing cost of insurance to the value of the asset insured, car insurance is much more expensive and while the insurance premiums tend to increase on both, cars depreciate while diamonds tend to appreciate.
So now that you understand the necessity of diamond ring insurance, here are five common questions about the process.
1) What type of policy should I get?
Diamonds and engagement rings should be insured using a separate insurance policy, not added to homeowners’ or renters’ insurance. There is misconception that diamond rings are fully covered under the homeowners’ and renters’ insurance policy, but this may not be the case. Homeowners’ insurance is an umbrella policy for all the jewelry in your home, and just like the policy states, coverage may only be limited to your home. So if your diamond ring is lost while swimming in the ocean on your honeymoon, the loss may not be covered unless you live on a boat. Another weakness to the home owner’s policy is the maximum value covered. The umbrella policy covers all jewelry in your home but the maximum coverage is limited to the dollar amount you elected. So if the maximum plan coverage is $10,000 and a thief steals all your jewelry valued at $15,000, you will be out $5,000.
2) What should I look for in the policy?
The advantages of insuring a specific piece of jewelry under a personal articles policy is robust coverage from a menagerie of causes and global geographical coverage. Look for a mysterious disappearance clause in your policy to cover the diamond from practically any type of damage or loss, including but not limited to theft, chipping, cracking, misplacement, even if the dog eats it.
True story… A customer of mine left her wedding set on the counter and couldn’t find them. She thought dogs ate the rings and sifted through poop for a few days. After failing to find the rings she filed a claim and the insurance company paid for a replacement. Turns out she was a victim of a serial criminal who would sneak in through doggy doors to steal jewelry.
3) How much does jewelry insurance cost?
The cost of a personal articles policy is very affordable compared to the value of the protected asset. Policy prices vary among different carriers and other factors such as zip codes home security systems influence the price. But expect the cost to be about 1.5% of the appraised value, or $15 for every $1,000. Tip: electing a higher deductible can significantly lower the insurance premium.
4) What do I need to insure my engagement ring?
Typically the only document required for a personal articles policy is an appraisal. Appraisals are documents prepared by qualified jewelers that appraise the estimated replacement value of the jewelry. Appraisals can cost from $35 up to $200, depending on the extent and depth of the appraisal.
5) My jewelry store offers protection for the diamond ring, do I still need insurance?
Yes you do! Some jewelry stores may offer protection in case the center diamond falls out of a ring, but they typically require you to bring the engagement ring back every 6 months for inspection. If you miss an inspection the protection is voided. Also, what happens if the ring is lost or stolen? The store will not protect you against theft or loss, but an insurance policy will.