Insure Jewelry Right The First Time
Don't Wait Until It Gets Lost Or Stolen
My new insurance agent pointed out, when delivering the policy (unlike my former agent, who mailed the policy, which I promptly filed away unread), coverage for lost or stolen jewelry had a limit of $5,000. He suggested that I put a rider on my policy to "schedule" individual pieces of jewelry if I thought my gems were worth more than the limit allowed.
At first, before I did some research, I thought that this was just a ploy to sell more insurance. What I found out, though, was that almost all homeowners policies have strict limits on jewelry coverage; often the limits are as low as $1,000. To increase coverage, typically you have to have individual items appraised and itemized in a separate policy. Additional coverage is called a rider.
Because the verbiage on insurance policies can be difficult to read, I'll bet that many people don't know what is covered on their policies and what isn't until they meet up with disaster. I suspect that many file the paperwork away without reading it, just like I did. Then they go to bed every night thinking that those baubles that they inherited from Grandma are covered under their homeowners insurance. Wrong!
It's more likely that if their home is broken into and they lose jewelry in excess of their policy's limit, like losing items valued at $10,000 when they have only a $5,000 limit policy, they're simply out of luck. Sorry, your agent will tell you. If you didn't have a rider, you're not insured.
Think Like A Jewelry Claims Investigator
So what should you do? You should make sure your gems are covered the way they should be. It will take a bit of legwork, but if a calamity occurs, you'll be prepared.
First, look at jewelry claims from the other side of the desk. Jewelry insurers claim that business is tricky because guidelines for replacement costs are varied. For instance, there are no published price guides for jewelry like that indispensable "blue book" that is frequently used for evaluating cars. Most pieces of jewelry can't easily be categorized, so it's difficult to ascribe value across the board.
Plus, most insurance companies are as unfamiliar with the value of your Aunt Sue's diamond ring as you are.
Also, jewelry claims are often suspect from the get-go. Why? Because jewelry is small and portable, may be of high value, and may be fake -- for instance, a stone may be a "cubic zirconia" instead of a diamond. Jewelry theft is a continuous threat for both the insured and the insurer. In 1996, the Federal Bureau of Investigation reported jewelry theft at $1.1 billion.
No surprise, then, that jewelry insurance claims are carefully scrutinized for fraud. Knowing that, you'll want to make sure that your valuables are adequately insured and carefully appraised in case they're lost or stolen.
Quality Of Information
Most people don't know the accurate value of their jewelry, mainly because they don't bother to have it appraised. More than 90 percent of appraisals come from the jeweler from whom the purchase was made, at no cost to the customer. The problem is that the appraisal may not be detailed. If an appraisal has limited information, it may not satisfy an insurance company. The appraisal may simply state that the item was a 14-carat gold pin valued at $3,000.00.
So what's wrong with that? Everything, jewelry claims investigators say. Your claim may be questioned unless you can prove that the lost gem was a specific item. To make sure your insurance company accepts a claim, get a detailed appraisal. When you have that gold pin appraised, make sure that the appraiser weighs the gold, documents its size and notes distinctive and unusual characteristics of design.
Make sure the clasp is looked at too. If it's in bad shape, a future claim may be questioned. It makes sense to spend the money to have jewelry repaired before it's insured. The appraisal should then note the piece's good condition.
If a piece of jewelry has diamonds or other stones, the stones should be weighed and noted for cut, clarity, color and shape. You don't want to miss any of these things. Even shape is crucial -- a marquis diamond, for example, given the rest of the specs being equal, may be worth 20 percent more than a pear-shaped diamond.
The appraisal should state the replacement value of each piece appraised -- as opposed to being lumped together with several other items that you have. For more information about diamond grading, visit the Gemological Institute of America.
Finding An Appraiser
Interestingly, there are no federal regulations for gemological training. Almost without exception, anyone who can write and see can put together an appraisal. Keep in mind that most jewelers aren't certified gemologists. That doesn't mean that they can't provide you with a detailed appraisal based on their wealth of knowledge and experience. But both you and your insurance company will want to make sure that your jewelry is appraised by a credible source -- particularly if your items are rare, are estate pieces or have high value.
There are two U.S. organizations that have well-known standards for training certified gemologist appraisers. Look for the American Gemological Society's certification, "CGA," for certified gemologist appraisers, and the Gemological Institute of America's "GG" for graduate gemologist. You may have to pay an out-of-pocket fee to have your jewelry appraised, but the fee is well worth it.
Keep Good Records
It's one thing to have your jewelry appraised once before you have it insured, but several times in your lifetime? Yes, say the experts, because jewelry changes in value. Most people don't bother, but to make sure that your gems are insured for their current value, you should have them appraised every three to five years.
One big thing that insurance companies look for when reviewing claims is proof of ownership. Was that lost watch you're claiming really yours? It's such a simple thing, but many people don't take time to document their valuable possessions. Take photos of your insured jewelry, then put the photos in a safety deposit box. Better still, have photos taken of you wearing the items.
If you're keeping valuable items at home, instead of in a safety deposit box (which is more advisable, unless you wear them all the time), consider getting a security system. It may be something that your insurance company will suggest that you request anyway before they underwrite your policy.
Before You Buy Additional Insurance
These are a few questions that you should ask your insurance agent before insuring your jewelry:
- Does your policy cover lost stones as well as lost or stolen jewelry?
- Are you covered for loss or theft all over the world, even when you travel?
- How often should you have an appraisal?
- Do they offer a discount if your jewels are kept in a safe at home or in a safety deposit box off the premises?
- What do you need to do to prove a claim?
- Make sure you see the answers to your questions within the policy itself.
