The Importance of Jewelry Insurance: Pros, Cons, and What You Need to Know
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Bryan Boyne (g.g.) , Thursday, September 19, 2024Sometimes it’s an afterthought. “Holy cow, I just ordered an engagement ring that is one of the most expensive things I’ve ever bought. I need insurance asap!” Insurance is never a fun thing to shop, and certainly not something you want to do in a panic. But consider the potential risk you face without it. If you can afford to self-insure, that can be a sound decision. But NOT if you would be unable to repurchase the item should it be lost or stolen.
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So, for those planning ahead what options are available? Essentially there are two; add a jewelry rider to an existing policy such as homeowners insurance, or take out a standalone personal jewelry insurance policy. Here are some pros and cons of each for your consideration:
The main advantage of adding a rider to an existing policy for your new piece of jewelry is convenience. You already have the established relationship with the insurer so adding to your policy can be a very simple process. Plus, it helps you keep all your coverages in one place making it easier to keep track of things. And each coverage that you place with that company makes you a more important client to them, which can sometimes give you more influence in getting a claim settled promptly and fully.
| Feature | Jewelry Rider on Homeowners Insurance | Standalone Personal Jewelry Insurance (e.g., Jewelers Mutual, Chubb) |
| Convenience | Easy to add to an existing policy, keeps all coverages in one place | Specialized policies offered by jewelry experts, often integrated with merchants |
| Impact on Other Policies | A jewelry claim may affect the rates of your homeowners policy | Jewelry claims don’t affect other insurance policies |
| Expertise | Limited expertise in jewelry; might result in lower quality replacements | Specialized knowledge ensures better quality replacements, even for rare cuts |
| Cost | Can increase over time due to claims affecting other policies | Often competitively priced, may include extra services (e.g., service plans) |
| Coverage Quality | May not offer coverage for specific details like super ideal cuts | Tailored to jewelry, covers intricate details like grading reports, appraisals |
| Deductibles & Exclusions | Varies; can impact other policy deductibles and exclusions | Specific to jewelry, with customizable options |
| Documentation Required | May need additional appraisals | Often accepts invoices; specialized coverage for market price changes |
| Replacement Process | May offer generic replacements with basic criteria | Works with jewelry specialists to match "like kind and quality" exactly |
One big potential downside of this arrangement is that if you have a claim on the jewelry piece, it may impact the ongoing rate you pay for your other insurances. This can add up to very high costs over time. The other potential downside is that the homeowners agent may not have a high level of expertise in the jewelry industry so getting a replacement of “like kind and quality” may be more difficult, causing you to have to settle for something less than what you had in the original piece. A diamond with the same basic grading could be very different if it was a specialty cut such as a
super ideal. Or they could replace the item with a problematic Si1 instead of that “unicorn” you shopped so hard to find.
The advantage of a standalone personal jewelry policy with a jewelry specialist such as
Jewelers Mutual is two-fold. First, your policy is not connected with any other insurances that you might have and therefore a jewelry claim will not adversely affect your rates on your other policies. Secondly, you are dealing with a company that specializes in jewelry and has the expertise and diamond industry contacts necessary to make you whole, even down to the details of a grading report or appraisal.
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Of course you need to compare rates and the details of coverage, especially deductible amounts and exclusions. But many shoppers are surprised to find the personal jewelry specialist policies are price-competitive with generic riders, and sometimes are actually less expensive. Also, jewelry specialists may have additional options such as
service plans, that cover costs beyond just loss or theft, that can take all the uncertainty out of owning a piece of fine jewelry. If total peace of mind is appealing, then seriously consider what the jewelry specialists have to offer.
An aspect of obtaining coverage is what documentation you need to file. Do you need to purchase an additional appraisal or is your invoice sufficient? If you supply an invoice will your coverage be limited by the amount paid if prices increase in the future?
Convenience, which was the first advantage mentioned in this article for going with a rider on an existing policy, is actually not the only way to achieve this. Some merchants have established relationships with personal jewelry insurance specialists that allow you to get immediate quotes and even bind coverage right on the merchant’s website through a technology connection to the insurer. This can be a great convenience for the person who has not been thinking about insurance through the process of shopping for the jewelry item. Not only can they get immediate coverage for loss or theft, but the option to choose from service plans may be available as well. One and done!
Whatever decision you make, and everybody is different, it’s best to be proactive rather than waiting till the last minute. Buying a diamond or piece of fine jewelry can be a stressful process. Keep it enjoyable by considering your insurance needs and preferences before you take delivery!