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How Do You Insure Jewelry?

Home insurance has a low coverage limit for jewelry. Learn what your best insurance options are to cover your bling.

Insured jewelry

If your jewelry is lost or stolen, insurance can help with the loss. While home insurance helps cover some jewelry loss, its jewelry coverage limits are pretty low and offer minimal protection. There are different options to insure your jewelry, depending on how much you have and what it’s worth. These options include home insurance, floater policies, and jewelry insurance. Each one carries pros and cons for you to consider. This article details:

The Different Types of Jewelry Insurance

Depending on how much jewelry coverage you need, there’s an insurance plan to fit your needs. Your homeowners insurance covers jewelry to some degree. However, home insurance coverage for jewelry often is limited in how much it pays out. For the best coverage, you’ll want a jewelry floater or Jewelry Protection Insurance (JPI).

Homeowners Insurance Coverage for Jewelry

Standard home insurance, known as a HO-3 policy, covers jewelry under your policy’s personal property coverage. The perils that standard home insurance covers jewelry against include:

  • Fire
  • Explosions
  • Theft
  • Vandalism
  • Water damage from plumbing

As it is already part of your policy, there is no additional premium to cover your jewelry with standard home insurance. A HO-3 will cover jewelry for an average of $1,000 to $2,000, even if your personal property limit is higher. Standard home insurance isn't the best bet where jewelry is concerned. For example, say your wedding ring worth $25,000 is damaged in a fire. With a standard home insurance policy, you will only get paid out a fraction of the ring’s value. When you add in your home insurance deductible to that, the amount of money you get back with a standard HO-3 for your jewelry claim isn’t much.

Jewelry Floater

A jewelry floater, also known as a rider, is one of the best ways to cover your jewelry. A jewelry floater is a big step up from what a standard HO-3 policy provides, as it offers comprehensive coverage on scheduled jewelry. “Scheduled” means that itemized and appraised pieces of jewelry are covered for their full value.

Jewelry floaters are popular with people who have large jewelry collections.  The better jewelry riders include “mysterious disappearance” coverage. Home insurance doesn't often consider misplacing something as damage. With HO-3 insurance, if a diamond engagement ring goes missing, your HO-3 often won’t cover it. Mysterious disappearance coverage will replace the ring. In some cases, the disappearance doesn’t need to be all that mysterious. If you are swimming in a river and your engagement ring falls off, you know where the ring is, but it probably can’t be recovered. A jewelry rider with mysterious disappearance coverage should cover it.

It should be noted that there is a difference between mysterious disappearance and accidental loss. Accidental loss would be a case where your pearl bracelet gets snagged on something and pearls go flying everywhere. You gather all the pieces but find that the bracelet cannot be repaired. Accidental loss is covered by most jewelry floaters. Mysterious disappearance is only covered by some. If the jewelry floater you’re looking at doesn’t include mysterious disappearance coverage, ask your insurer if it can be added on.

All in all, having a jewelry floater saves a lot of money and heartache. Another big benefit of jewelry floaters is that they have no deductible.

Your jewelry floater premium is based on the appraised worth of the jewelry covered and the area you live in. Should you want to cover your jewelry with a rider, your home insurer will need proof of the item’s value. This proof can be acquired with a professional appraisal.

Jewelry Protection Insurance (JPI)

Jewelry Protection Insurance is a separate policy from homeowners insurance. It is specially tailored towards jewelry coverage. As such, it covers a much wider range than home insurance. JPI covers your jewelry at against loss, damage, and theft. If mysterious disappearance coverage isn’t part of the JPI policy, it can sometimes be added on. Insurers who offer Jewelry xProtection Insurance also cover jewelry repair costs for covered items. One of the standout features of JPI is that your premium doesn't go up after a claim is made.

Jewelry Protection Insurance often won't cover:  

  • Wear-and-tear
  • Flood
  • Earthquakes

JPI pays out claims three different ways: Actual Cash Value (ACV), Replacement Cost, or Agreed Value.

Actual Cash Value

An ACV policy covers your jewelry for its value minus any depreciation that has occurred. It’s the market value of the jewelry at the time of the loss. Jewelry doesn’t depreciate the way other items can. If anything, it tends to increase in value over time. However, any wear and tear over time can reduce its value. This can affect your payout after a claim.

Replacement Cost

Replacement Cost coverage pays out on your jewelry claim without considering depreciation. It’s the cost to replace the jewelry with a new piece. The only payout limit is the coverage amount listed on the declarations page of your policy. When making a JPI claim at Replacement Cost, you will be paid out the amount needed to repair or replace the covered item. The only limit here is the amount you had it appraised for at the time of insuring it.

Agreed Value

Agreed Value coverage is based on a value decided by you and your insurer. Your insurance pays out at that value in the event of a loss. This is probably the best payout option available for your jewelry. However, this coverage type also carries some of the highest premiums.

Jewelry Protection Insurance Cost and Appraisal

On average, JPI costs one to two percent of the jewelry's appraised value. The retail market value changes frequently. As such, you should reappraise your jewelry every one-to-three years.

Regarding the appraised insurance value of your jewelry, you should know the difference between Retail Replacement Value and Resale Value. The RRV of your jewelry isn't the same as what it would sell for on the resale market. RRV reflects what a piece of jewelry is worth for insuring it, not for what you can sell it for. For example, if your engagement ring is appraised for $10,000 on your JPI policy, that means you are paid out that amount if the ring is damaged. If you try to sell the ring you may get more for it, or you may get less.

To find out what your jewelry’s resale value is you'll need a resale appraisal. This is a professional estimate of what a buyer would pay on the open market for a piece of jewelry. When jewelry is resold, it’s often as used jewelry on the wholesale market. RRV appraises value of jewelry as new on the retail market.

Jewelry Protection Insurance is worth it but be prepared to pay a big premium. You can often lower your premium by taking on a larger deductible, but that means more money out of your pocket if a claim needs to be filed.

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