Some of the most valuable assets in your home may be unprotected.
We're talking about your fine jewelry: your diamond engagement ring, the vintage Rolex Dad left you, the black-pearl necklace you picked up in Tahiti. Sure, you most likely have a comprehensive insurance policy covering your house and furnishings. But homeowners' or renter’s insurance doesn’t automatically mean every item under your roof is insured (if you’re a renter, you know of course that your belongings are not covered by the property owner’s insurance. See 6 Good Reasons To Get Renter's Insurance).
In fact, some policies specifically exclude jewelry and other valuables (musical instruments, artwork and furs among them). Other policies limit coverage to certain types of events and to a defined dollar amount. This level of coverage can be significantly inadequate, especially if you want to replace the sort of item that has substantially appreciated in value since its purchase.
What You Need
What's required, if you have substantial assets of this type, is additional insurance. Known as a rider or, more specifically, a floater (which targets small, moveable items), it takes over when traditional insurance coverage ends, and typically covers the insured item against fire, loss, theft or damage.
Most major insurers do not offer jewelry coverage as a stand-alone product (an underlying property insurance policy is required). But owners of valuables can purchase coverage as an add-on to their existing homeowners' policy. In fact, most of the more well-known insurers require additional handling for high-end valuables.
Cases in Point
At USAA, for example, a typical homeowners' policy covers jewelry lost to fire or theft, but not to accidental damage or loss. The coverage limit for jewelry is $10,000 (no per-item limit) and is subject to the policy deductible (the amount you’ll have to pay before insurance coverage kicks in). For more jewelry coverage, a separate policy is necessary.
USAA’s Valuable Personal Property policy covers a broad assortment of accidents and incidents. It will, for example, pay for a replacement diamond if the stone falls out of your engagement ring, or for repair if the ring is accidentally broken. And the deductible is $0. This coverage also applies to musical instruments and fine art. No appraisal is necessary for any jewelry items insured for $15,000 or less, though a receipt or proof of ownership is required when making a claim.
Farmers Insurance has a similar approach. In a typical homeowners' policy, for instance, jewelry is covered up to $1,000 per item and $5,000 per incident (theft, fire). Damage due to accidents is not protected. Farmers offers riders to cover valuable items, and the deductible is chosen by the insured (starting at $0). In most cases, Farmers requires a receipt or appraisal for each item being insured.
Geico and Allstate offer comparable options. Standard policies limit personal property coverage to $1,000 to $2,000. Riders or floaters are available to increase the amount of coverage, and to cover loss and damage not covered by the main policy.
What To Ask
When you look around for the best policy, keep these questions in mind to ask the insurer:
- How exactly claims are handled: Will you be required to purchase a replacement and then request reimbursement,or will the insurer send a check first?
- Is the item's full replacement cost covered and how is that amount determined (especially if the item is antique or custom-made)?
- Do coverage limits fluctuate with the price of precious metals or gems?
- How often can/should you submit updated appraisals?
- What proof of loss or damage will be required?
- Which exclusions does the policy have? What types of loss and damage are not covered?
Before buying your policy – and when making additions to it down the road:
- Have your item(s) professionally appraised, to determine their value for insurance purposes.
- Take photos of the item(s).
- If you have the option, as with the aforementioned Farmers Insurance rider, consider increasing the deductible to lower the insurance premiums.
Once your policy is in place:
- Keep all your items' receipts, appraisal paperwork and photos locked away in a safe (but easily accessible) place.
- Store items securely when you aren’t wearing them.
- Avoid traveling with irreplaceable or extremely valuable jewelry.
The Bottom Line
Most insurance providers offer discounts to customers who purchase multiple policies. If you purchase your home, auto, life and property insurance from a single provider, you are likely to get a better deal overall (see Making Sure Your Jewelry Is Insured).
If you don’t have homeowners' or renter’s insurance, you may be able to purchase stand-alone coverage from a provider that specializes in insuring jewelry. Some jewelers offer such policies, or can recommend a company that does.
Last, but not least: Protecting your property doesn't mean you can't ever wear it. On the contrary, if you insure your valuable pieces, you can use and enjoy them all the more, knowing they're adequately covered. For more information, see Should You Insure Your Wedding Ring?)