As Valentine’s Day draws near, people's thoughts tend to drift toward romantic things - fancy dinners out, chocolate, flowers, and jewelry. The dinners, chocolate, and flowers are straightforward - the dinners and chocolates are consumable, and the flowers, while lovely, will only last a week or two. But diamonds are forever, as are other gemstones. But jewelry is also on the expensive side, even if you’re buying lab created stones, and therefore should be insured. But it’s already covered by my homeowners or tenant policy, right? Well, sort of.
The standard home, condo, or tenant policy provides a limited amount of jewelry coverage. The standard homeowners policy provides $2,000 for loss by theft of jewelry, watches, furs, and precious and semiprecious stones. That’s not a lot of coverage if you have even a few pieces of nice, not even really expensive, jewelry. Okay, but that’s just for theft. The comprehensive policy is a little broader and provides $2,000 for loss by theft, misplacement, or loss of jewelry, watches, furs, and precious and semiprecious stones. What about if my jewelry is damaged in a house fire or something, that’s covered, right? Again, sort of.
On the standard homeowners, tenant, or condo policy, personal property is covered on a named perils basis, which means the property must be damaged by one of the perils listed in order to be covered. The perils are fire/lightning, wind/hail, explosion, riot/civil commotion, aircraft, vehicles, smoke, vandalism/malicious mischief, theft, falling objects, weight of ice, snow, sleet, discharge of water or steam, tearing apart/cracking/burning/bulging of hot water and other systems, freezing, damage from artificially generated current, and volcanic eruptions. But if you lose a stone out of a piece of jewelry, there’s no coverage. Nor is there coverage for dropping an earring down the drain, breaking the chain of a necklace or a bracelet, exposing pearls to cleaners that damage them, or any other things that commonly happen to jewelry that aren’t covered perils. The comprehensive form does provide coverage for lost or misplaced jewelry, but only to the $2,000 limit. Other losses are covered on what’s known as an open perils basis, which means that as long as the loss is not excluded, there’s coverage. The comprehensive form has no exclusions for jewelry. So if someone takes off their engagement ring to wash the car and loses the ring, there’s no coverage on the standard policy and only $2,000 of coverage on the comprehensive policy. Coverage is at actual cash value, not replacement cost.
So how do you insure your jewelry? First, you’re going to need an appraisal from an appraiser who is a certified gemologist that describes the components of the item. A certified gemologist has been trained to identify and categorize precious and semiprecious stones. The appraisal should list what metal is used – silver, gold, if gold what karat, gold overlay, vermeil, platinum – and the type of setting - solitaire, halo, side stones, etc. The stones need to be identified and described by cut, color, clarity, carat, and for pearls, luster. Each type of gem or semiprecious stone has its own rating characteristics. The appraiser/gemologist will give the value of the item. The appraisal can then be given to the insurer, and the item can be scheduled onto the policy for additional premium. The appraisal value will become the insured amount. Insurers generally want appraisals to be fairly current as values change, so an appraisal that’s ten years old is apt to not be accepted. It’s generally not that expensive to schedule a piece of jewelry onto your existing policy or get a separate jewelry floater. Coverage is very broad with few exclusions such as wear and tear, deterioration, vermin, war, and nuclear hazard.
One last thing – the name on the appraisal needs to be in the name of the person insuring and owning the property. So if you plan on buying jewelry for your sweetie, get it appraised at the time of purchase, and have the appraisal show your sweetie, not you, as the owner. Your sweetie is going to own, wear, and insure the jewelry, not you.
Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.