What Is a Jewelry Floater?

A jewelry floater is a type of supplemental insurance designed to protect precious jewelry. It is often purchased alongside other forms of insurance, such as homeowner’s insurance or renter’s insurance. Although these types of insurance generally include some coverage for jewelry, jewelry floaters can expand this coverage, making them more suitable for valuable items.

Key Takeaways

  • Jewelry floaters are a type of supplemental insurance intended to protect valuable jewelry.
  • These types of add-on insurance policies are common for a range of valuable personal possessions.
  • To obtain a jewelry floater, it may be necessary to pay for a professional appraisal beforehand.

How Jewelry Floaters Work

A jewelry floater is an optional addition to a homeowner's insurance policy that protects against financial loss from the damage or theft of valuable jewelry. Although basic homeowners policies typically provide some jewelry coverage, individuals with sizable or valuable jewelry collections often opt to purchase a jewelry floater in addition to their basic policy. If the jewelry does get damaged, stolen, or lost, the jewelry floater can provide a higher dollar amount of coverage than would be possible under the basic home insurance plan.

Aside from jewelry, floaters are also often purchased for other types of valuable assets. Examples include fine art, high-end watches, or even collectibles such as baseball card collections. In some cases, investors may even specifically purchase these assets as a type of alternative asset in their portfolios. For these investors, as well as wealthier individuals in general, purchasing floaters might be a worthwhile expense to ensure peace of mind.

In addition to purchasing jewelry floaters, policyholders will often also obtain formal appraisals of their jewelry’s worth. In doing so, they can prove the value of these items in the event that they need to file a claim, reducing the risk of any potential disputes with their insurer. In fact, many insurers will require that a professional appraisal be performed as part of their due diligence on the jewelry floater policy. After all, from the insurance company’s perspective, it is important to understand the value of the item so that they can set their insurance premiums at an appropriate level.

Real World Example of a Jewelry Floater

Michaela is a collector of high-end jewelry. Under her rental insurance policy, she is entitled to a certain amount of coverage for all her personal possessions. However, Michaela realizes that, if her collection were to be stolen or destroyed, she might quickly exceed her maximum coverage level under her rental insurance policy. Moreover, because the jewelry in her collection is valuable and rare, she worries that the insurance company might not understand their replacement value if she were to file a claim.

For this reason, Michaela decides to take out a jewelry floater. In doing so, she obtains a professional appraisal of her jewelry and incorporates this appraisal into her new insurance policy. That way, if she were to make a claim, she has clarity that the insurance company understands and accepts the actual replacement value of her insured jewelry. Moreover, Michaela is careful to set the insurance policy so that its maximum coverage level would fully capture the value of her collection.