Jewelry Insurance Protects All That Glitters

If your favorite piece of jewelry disappeared or was badly damaged, would you feel:

• Devastated because of its sentimental value?

• Crushed because you couldn’t afford to replace or repair it?

• Reluctant to wear or buy good jewelry again in the future?

If you answered "yes" to any of these questions, jewelry insurance might be a smart investment.

Jewelry insurance pays out when your jewelry is damaged or stolen. Some policies also pay for lost jewelry.

Where to buy jewelry insurance

Standard policies from major homeowners and renters insurance companies typically offer some coverage for jewelry, often up to $1,500, according to the Insurance Information Institute.

If you don't have homeowners or renters insurance, or that's not enough to cover your jewelry, you can:

Add special jewelry coverage to your home or renters policy, usually called a “scheduled” floater, rider or endorsement. These policies require you to itemize specific pieces of jewelry, along with their replacement values. They typically have higher coverage limits than standard homeowners or renters policies, as well as coverage for more circumstances, and they often don’t charge a deductible.

» MORE: Understanding homeowners insurance

Buy a more comprehensive policy through a jewelry-only insurance company. Some insurers offer jewelry insurance as a stand-alone policy, and some specialty companies sell only jewelry insurance.

Companies that specialize in insuring jewelry often offer more comprehensive and customizable coverage. You can snag coverage with more options and higher limits than the coverage offered by your current home or renters policy, says Janece White, senior vice president and jewelry underwriting leader at Chubb. These companies include:

• Jewelers Mutual

• JIBNA

• Lavalier

Jewelry warranties are generally limited to manufacturing defects, so they’re not an alternative to insurance.

Coverage options

Pricing and discounts

Stand-alone jewelry insurance policies generally cost 1% to 2% of each item’s value, and the cost of a floater on a homeowners or renters policy “really depends on what you’re insuring,” says Jeff Ill, vice president of homeowners product at Esurance.

The price of a policy can be influenced by:

• Your location

• The number of pieces you’re insuring and their individual values

• The deductible (the amount subtracted from your claim check)

• Whether the policy reimburses actual value (the cost minus depreciation) or replacement value (the cost to replace it today)

“If you live in an area where thefts are common, rates will reflect it, but you can take extra steps to get a better rate,” White says.

Discounts might include having a home alarm, keeping the policy for multiple years, storing the jewelry in a bank safe, or registering the jewelry with a third-party, such as Gemprint or Forevermark.

Some insurers require an appraisal before providing the final quote.

Insurers often provide quotes for jewelry insurance online or over the phone. Once you have a quote, the application will probably be easy to complete, and your coverage can begin as soon as you've made a payment.

Jewelry insurance claims

To avoid unpleasant surprises when you file a claim, it’s important to understand how you’ll be compensated.

Many insurance companies say they’ll pay for “repair or replacement” of damaged or stolen jewelry, but get specifics about how those payments will work. Ask your agent:

• Am I covered if I damage or lose my jewelry by accident?

• Is jewelry given or received as a gift covered?

• Does my coverage change when I’m traveling?

• Will I be reimbursed the cash value of the item or the amount it takes to replace it?

• Can I choose my own jeweler for repair or replacement?

• If I own custom jewelry, will my policy pay for a new piece, or will I be required to accept something “comparable”?

You should be free to make your own decisions about repairing your jewelry, replacing it or “[taking] the money and [going] to Boca,” White says.

The most common reason for jewelry insurance claims? “Mysterious disappearance, by far,” says Donald Soss, vice president at Nationwide Private Client. Insurers use this term when an item is lost for a reason other than theft, such as stepping out of the pool and realizing your ring is gone.

Note that making a home insurance claim for jewelry could cause your premium to increase at renewal time. Buying a stand-alone jewelry policy keeps the coverage separate, so a claim won’t affect your home insurance premium.

Typically, the owner of the valuable item also owns the jewelry policy. Giving a piece of jewelry away as a gift might mean it's no longer covered by your policy, unless the policy specifically states otherwise.

So, should you buy jewelry insurance?

The decision to insure jewelry ultimately comes down to how worried you are about paying for repair or replacement if something happens to a piece you love.

“Whether you’re a beginning collector or person who has a lot, you should always be thinking about what it would take to financially be made whole again after a loss,” White says. “The goal is to avoid out-of-pocket costs or being forced into a type of compensation or repair you don’t want.”