Many people have a significant amount of jewelry or even just one valuable piece like an engagement ring or a watch. These pieces often hold just as much sentimental value as financial value. Making sure that you know what your jewelry is worth and that carefully evaluating your personal property insurance coverage is vital to protecting yourself from destruction, theft, damage or loss of your most treasured items.
According to Chubb Personal Insurance, $1.5 billion of jewelry is lost or stolen in North America each year. Unfortunately, much of this jewelry is either uninsured or underinsured. Why? Many people might subscribe to these common myths about jewelry and jewelry insurance:
- I have all the jewelry coverage I need under my homeowners insurance policy. It is true that homeowners insurance policies provide jewelry coverage, but it is limited, even if you have really good coverage. Insurance companies typically limit jewelry coverage to $1,000 – $5,000 (after a deductible), and this only applies to certain “covered perils” that are outlined in the policy. You probably have zero coverage for loss due to damage or accidental loss.
- Jewelry insurance is too expensive, I’ll have to get by with the coverage I have. The reality is that it’s far less expensive to add appropriate coverage than it would be to replace a valuable piece that was underinsured.
- Getting appraisals is difficult and time-consuming. It’s not, and we can help!
- My jewelry is safe in my home. You cannot protect your home and belongings under every circumstance, even if you have a security system and take other security precautions. What’s more, additional jewelry insurance provides coverage for more than just theft from your home. You can get better coverage limits with all-risk coverage that is not subject to a deductible.
There are two ways to increase the coverage limits on high value jewelry. First, you can increase the “special limits of liability” for the categories in which you have valuable items, in this case jewelry. Under this “blanket coverage” increase, you can increase the entire jewelry category limit to a more satisfactory level.
Or, you can use a scheduled personal property rider to increase the individual coverage limit on certain items. Adding a scheduled personal property rider provides “all-risk” coverage. This means that the scheduled items are covered for all risks, not just the covered perils outlined in the main homeowners policy.
Blanket coverage and scheduled personal property riders are not typically subject to a deductible.
Why Are Appraisals Important?
It is important to have your jewelry appraised for a variety of reasons. First, the insurance company will likely require it to write coverage, and it is important to have a proper valuation. Appraisals not only confirm for the insurance company that the item you want to insure actually exists, but they also confirm the value and provide a description if there is a loss.
There are several different types of jewelry appraisals.
- Replacement cost appraisals are typically used by insurance companies. They determine how much it would cost to replace a piece of jewelry at retail value. Replacement cost appraisals should reflect a value that is at least 10% or more over what you paid for the item if you bought it recently. This ensures that when you have it insured you will be covered if the value of the metal or stones increases over time.
- Market value appraisals determine the cash value of an item for sale or resale—or what a willing buyer and seller would agree to if the piece were put up for sale. This value will usually be somewhat below the retail value if the piece was for sale in a jewelry store, and reflects what you could reasonably sell it for if you could find a willing buyer. Market value appraisals typically do not have a built-in added value to account for future fluctuations in materials costs.
- Estate appraisals determine the fair market value for estate, auction, donation, collateral or tax purposes. These appraisals also generally won’t have a built-in increase in value like a replacement cost appraisal because they are intended to be a valid evaluation on the day they are written or on a specific date. An estate appraisal paints the most accurate picture of what a piece might cost today in a retail environment.
Jewelry should be appraised every 3 – 5 years and your insurance policy should be adjusted accordingly.
Do you have jewelry or other valuables that should have their insurance coverage evaluated? We can help you determine if you have the right amount of personal property coverage today.
