While a box of chocolates in a shape of a large heart has long been the default gift to loved ones on Valentine's Day, nothing screams "I love you" louder than a diamond ring or luxury watch—or so advertisements would have us believe.
Based on a longstanding tradition, jewelry is a durable staple of February 14. In fact, the National Retail Federation estimates that 19 percent of consumers will spend as much as $3.9 billion in total on "something sparkly" this year.
Moreover, the Insurance Information Institute (I.I.I.) didn't miss a beat, recently alerting the public about the importance of safeguarding jewelry gifts around this time of year. In doing so, the I.I.I. cited how losses of rings, watches and other jewelry are "among the most frequent of all home contents-related claims."
"The word 'insurance' is not likely to be the first word on many lovers lips," says Jeanne M. Salvatore, the I.I.I.'s chief communications officer. "However, if an expensive gift of jewelry is lost or stolen, it can certainly soothe the sting of losing a cherished gift. Your first step after receiving, [for example], a valuable engagement ring—well, maybe your second after saying "yes!"—should be to call your insurance professional."
Certainly where contents are involved, Enservio's data demonstrates that burglary claims are increasing in both frequency and value, as the average claim now tops $4,000.
Jewelry is still a category leader, with rings being the most claimed item. Looking at Enservio's data for 2013 alone, more than 46,000 types of rings were identified by insureds. Everything from 10 karat gold high school class rings to ruby rings with 20 points of set diamonds, these fine items represented a replacement cost value (RCV) of $64.8 million.
For policyholders who have collected a drawer of jewelry from Valentines past, it can be a challenge to know whether every single piece is covered by a property policy for its current value. The TV show Antiques Roadshow gives viewers a classic case of 'perceived values.' When it comes to assigning value to an item, in many cases the policyholder's perspective does not align with that of the professional appraiser's. Thus, a disparity exists between perceived value and actual value.
To ensure that jewelry items receive their proper RCV, policyholders are typically advised, perhaps via an agent, to begin establishing a catalog of what items are in the home. Taking the time to inventory and record exactly what is at stake, and even adding photographs for special valuable pieces, is probably the best step policyholders can take to protect their valuable assets. This, in turn, will help facilitate smooth insurance settlements.
Questionable Claims Values
But what about protecting insurers from questionable claims values? Drawing once again from Enservio data, insurance claims for burglary losses spike during the holidays, tax time, and back-to-school season (Dec., April and Sept.). For category leaders such as jewelry, apparel, and electronics, settlements are often paid at more than twice the average retail value of the stolen item. We have also seen burglary claims jump 15 percent in volume over a three-year period.
Looking again at the jewelry category, 2013 data shows the average claim for rings is about $1,400. Yet, the approximated average retail price for a ring is about $350.
Although the NRF reports that total spending on Valentine's Day 2014 is expected to reach $17.3 billion, when it comes to questionable claims, the cost to insurers is not so sweet.
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