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Jewelry InsuranceWhat You Need to Know About Insuring Jewelry

If you spend money on jewelry, then you need to consider whether it is worth insuring.  Insurance for jewelry and other valuables can be relatively expensive because the insurance company is going to provide real "All Risk" coverage.  What that means is that just about anything that happens to the piece is going to be covered.  Even mysterious disappearance.  But, there are a few things that you need to understand about jewelry insurance aka. Inland Marine insurance before you buy.

First, you need to understand that the insurance company is going to require you to have an appraisal.  If you have a valuable piece of jewelry a receipt will not be enough.  Also, the appraisals that you get from some jewelry stores are not going to pass muster with the insurance company because they are not issued by a certified gemologist.  Many jewelry stores will provide you with an appraisal that they create to help you feel better about the amount you actually spent for the item.  If you don't believe me, just try to sell the item for the value on the appraisal.
Second, you need to understand that the insurance company is going to make you insure the item to 100% of it's appraised value.  There are many reasons for this, but mostly it is because they are trying to generate as much premium as possible. 

Third, you need to understand that the contract states that the insurance company promises to "Replace" the item with "Like kind and quality".  That means that they are going to go to a jewelry wholesaler who has already agreed to provide them with discounts and they are going to replace your ring with one that is as close to the one that was lost as possible.

Finally, (here is the part that drives consumers crazy) the insurance company will probably pay much less than the amount on the appraisal to replace your item.  In fact, they will probably pay less than half what you paid. 
This is where consumers say "Hey, I paid a premium to insure my ring for $10,000 but you only had to pay $4,000 to replace it.  That's not fair!"  Remember, that the contract states that the insurance company will replace the item.  They did not promise to pay you $10,000.  They would pay up to $10,000 for the item, but there is nothing in the contract that promises you a cash settlement or that they will pay $10,000 if they don't have to.

If you decide that you don't want to insure your jewelry then you still have some coverage under your homeowners policy.  Most homeowners policies only limit coverage for jewelry for theft coverage.  However, if there is a fire or some other covered loss your jewelry will be covered just like your other personal property.  There is no limit to what they will pay.  Homeowners policies do provide limited theft coverage.  Most have a per item limit and a total limit.  These limits can often be increased to provide you with additional coverage. 

You can also add an Inland Marine Endorsement to you homeowner policy that will provide you with "All Risk" coverage for items like jewelry.  I would recommend a separate policy so that if you do lose that valuable item it does not appear as a loss on your homeowners insurance.  Homeowners insurance is underwritten very strictly these days and frequent losses can make finding coverage difficult.

So, if you decide that you want to insure your jewelry or other valuable items be sure to get a separate Inland Marine policy.  Understand that you will have to insure to the appraised value and it is likely that the insurance company will over charge you based on their real ability to replace the item.  You can expect to pay between $1.10 and $1.50 per $100 of value per year for jewelry.

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