Insuring Jewelry 101

By MoneyTips

For Valentine's Day, we hope you bought a thoughtful gift for your significant other. It's the thought that counts, of course, but let us give you a tip or two: women like jewelry. And, when it comes to fine jewelry, you should give thought to insurance.

Fortunately, your family's everyday jewelry is probably covered by standard homeowner's or renter's insurance (at current market value less any deductible), assuming you carry such insurance. However, if you have valuable or very sentimental pieces of jewelry, the coverage may be lacking.

How can you tell whether your coverage is adequate? The following steps can help you reach the best decision.

• Inventory and Appraisal – You cannot figure out if your coverage is sufficient if you do not assess what you have. You need a list of items and their current value for any insurance claim, as well as for a police report in case of theft.

Create a spreadsheet with each piece listed, along with the corresponding dollar value. Take separate photographs of all special or valuable pieces, and a "group picture" of the rest. Store the pictures in a safe place, along with all original receipts and certificates of gemstone quality – and, of course, your list. If you have a safety deposit box for some of your jewels, keep these papers with the jewels.

For heirlooms and more valuable pieces of jewelry, it is best to have them professionally appraised. Depending on the specific piece, the time and research involved, and where you live, the cost will vary. A good starting expectation is $50-$200 per piece. However, if you have made multiple purchases at a good jewelry store – and they consider you a valuable customer – they may provide appraisals at little or no cost.

• Assess Current Coverage – Homeowner's or rental insurance policies can be constructed several ways. There may be blanket coverage on all valuables, a separate blanket for all jewelry, or coverage on specific pieces of jewelry. All types of coverage go up to a specific dollar value, so check your limits in all cases.

Limits vary, but ballpark figures are $1,000 to $1,500 for any single item, with blanket coverage running between $2,500 and $10,000.

You can usually obtain a rider on your existing policy to cover specific, high-value pieces of jewelry. These are known as Scheduled Personal Property coverage, or "floater" policies. They may allow a higher dollar value, fewer exclusions, and different replacement options – with appropriately scaled premiums.

Along with the dollar value, check the other policy details. For example, what exclusions apply? Is accidental loss covered as well as theft? If so, what is required to prove loss?

• Replacement and Repair Options – What do you consider a proper replacement to be? Is a cash value replacement acceptable, or are there specific pieces you want to have replaced by as close of a duplicate as is possible – for example, a wedding ring handed down by generations of your family, or a customized ring or necklace from your spouse?

A policy may direct you to a specific jeweler, or allow you to select your own. If that is important to you, verify the policy terms regarding jeweler options.

Verify if appreciation is included, and what happens in case appraisal costs do not cover your desired duplication.

• Check Alternatives – If your current insurance company does not offer suitable coverage through an addition to your existing policy or a comprehensive replacement, consider a homeowner's policy through a different insurer, or a completely separate policy for your jewelry.

Some insurers specialize in jewelry coverage. They may work with jewelry stores, and offer coverage to their customers, or offer independent individual jewelry coverage. You will likely pay more for this coverage, but you will probably have greater control over the replacement. If replacing customized pieces with detailed exact duplicates is important to you, these policies may be more to your liking.

We hope that these tips will provide you with guidance on choosing the best policy for your needs. At the very least, you will have a proper inventory and appraisal should you need it. Also, why not take the time this week to confirm that the women in your life have suitable insurance in place to protect their jewelry and other valuable items? Your inquiry will certainly prove more valuable and last longer than a pretty bouquet.