While dressing up isn't as common as it once was, and people can now wear business casual or even casual clothes to work, the one constant is jewelry. Many people wear jewelry on a daily basis beyond their wedding rings; earrings, necklaces, bracelets and other rings are often worn for adornment. The jewelry market is expected to grow from 279 billions dollars in 2018 to 480.5 billion by 2025, almost doubling in seven short years. While the average cost of an engagement ring in 2019 was $6,350, many spend more on that for such a significant piece of jewelry. There are also many other rings, earrings, necklaces and bracelets with a variety of gemstones people may collect. The presence of online jewelry sellers such as Blue Nile or James Allen make purchasing expensive jewelry easy, and Jewelry Television (JTV) makes buying less expensive jewelry even easier.
Jewelry is easily lost or stolen, and on the standard homeowners policy is covered for named perils only, with a limit of $1,500 for stolen property. The property can be scheduled for additional premium for open perils coverage, with wear and tear, insect or vermin damage, war, warlike acts, nuclear weapons, and nuclear hazard being excluded perils. This is not the only available option, however. There are specialty policies designed to cover only jewelry with staff trained in gemology who can work with an insured's jeweler to replicate the missing or damaged piece.
Jeweler's Mutual is one such insurer, which provides coverage for both jewelers and individual insureds. They stress that having a standalone policy will not affect an insured's homeowners policy if the insured has a loss, that coverage is open perils, and that they have a built in insurance value adjustment to automatically increase the value of the insured property annually so that the coverage keeps up with the rising value of the jewelry. Jewelry often appreciates in value, and seldom depreciates, so this is an important feature, reminiscent of inflation guard on the homeowners policy.
The standard homeowners endorsement for scheduled jewelry excludes wear and tear, gradual deterioration or inherent vice. The Jewelers' Mutual has similar exclusions, but explains that the policy covers damage such that if a prong on a setting is broken or a stone is knocked against a table and broken, there is coverage for the loss. What is not covered is gradual deterioration such as scratches on the underside of a ring or inherent defects. This can be tricky since some stones are more prone to fracturing than others; if a delicate stone fractures, is that inherent vice and excluded, or is it covered damage? Does the insured have to prove that the ring struck against something and broke, making it sudden damage and not inherent vice?
A key aspect to any jewelry coverage is documenting the type of jewelry. Because the type of setting and the quality of the stone makes a significant difference in the value of the item, an appraisal is required. However, not all appraisals are equal. A credit card or simple sales receipt does nothing to describe the jewelry purchased. Even a letter from the jeweler may not be sufficient, as many do not include all the details. For example, a document may state that the ring contains an F color, round brilliant, VS 1.00 carat stone. While that sounds complete, since it has cut, color, clarity, and carat weight, a key element is missing, and that is the detailed information as to the cut of the stone. Cut is beyond the shape; the shape is round brilliant, but the proportions of the cut make a significant difference as to the geometric proportions as to how the stone is faceted; crown angle, table percent and pavilion percent make a difference as to the fire the stone displays. Two identical stones but with different proportions will have different values. For example looking at two one carat round brilliant stones, F color, good cut, VS1 quality with only two to three percentage points difference in cut vary in price by $577 at Blue Nile.
Standard detailed appraisal forms are available. The Jewelry Insurance Standards Organization, JISO, has five forms that they make available to industry professionals, certified appraisers and jewelers. These forms were originally ACORD forms 18, 78, 79, 805, 806, and 154 and have been renumbered into JISO format, keeping the original numbers. So the ACORD 18 becomes the JISO 18 and so forth. The forms are available at jiso.org or jcrs.com.
The forms consist of two appraisal forms to be used by certified appraisers, jewelers, or gemologists to correctly identify and appraise the items; JISO 78 is for a single piece of jewelry, and JISO 79 is for up to two items per page.
The next form is the Jewelry Document for Insurance Purposes, JISO 806. It contains the same descriptive elements as the appraisals but is used by jewelers who don't meet the training requirements for the JISO 78 and 79. It does provide the information necessary for scheduling items.
The Jewelry Receipt for Insurance Purposes, JISO 805 is for use by the selling jeweler to document the price paid for the item and a description of the item, but it is not an appraisal. This is used for items of lower value where the underwriter doesn't need an appraisal but a description of the item is necessary in event of a loss.
The Jewelry Appraisal and Claim Evaluation form JISO 18 is for use by an underwriter or claims adjuster to determine the adequacy and content of an appraisal submitted to underwriting or as part of a loss report. If the JISO 78, 79, or 805 were used, this form is not necessary.
The last form JISO 154 is the Jeweler's Inventory Record and is a manual recording system providing standardized item descriptions and it helps with appraisal preparation. It tracks inventory location and status, and pieces made up of several inventory items. For example, a sapphire stone surrounded by diamonds.
Jewelry is often expensive and meant to last a lifetime. Protecting one's investment is important, and insuring it properly is key. While jewelry can be scheduled on the homeowners policy, someone who has had a homeowners claim or two might do well by insuring the jewelry separately, so that jewelry claims do not affect the homeowners policy. An appraisal is vital to ensuring that the jewelry is properly valued and insured.