Insuring Your Jewelry
Insurance is simply a risk reduction mechanism and several types of policies are available to cover your jewelry. An insurance claim for a loss might be dealt with by several methods: some companies will replace a lost or stolen item in like kind, some will deduct a discount from the monetary value stated on the appraisal, a settlement might be negotiated, and so on. Too often I hear, “I THOUGHT IT WAS COVERED, BUT IT WASN’T!” So?
First, I am not licensed to give insurance advice. However, I know enough on the subject to tell you to ask, ask, ask your agent! It’s the easiest place to begin. I know regulations change. I recently completed the 2015 “APPRAISING GEMS AND JEWELRY FOR INSURANCE COVERAGE” course given by the American Society of Appraisers. I have considerable appraisal experience and I care (it’s your diamond engagement ring, for goodness sakes!). So you can count on me to do my part, which is to prepare an appraisal that is appropriate for its intended use: insurance coverage. I do a thorough job. But you need to ask your specific questions and get them answered.
Here’s are some things to think about so that you can formulate your questions:
The “retail replacement value” I list on the bottom line of your appraisal is a carefully researched and calculated sum by which your premiums can be determined. This can change with market fluctuations. Burmese rubies, Canadian diamonds: jewelry reflects the dynamic, global market and we can’t re-appraise jewelry each and every day as gold and gem prices rise and fall. And though crystal balls are nice, we can’t predict the future. Therefore, the most important part of an insurance appraisal is the accurate descriptions of the appraised items because insurance companies really insure the jewelry items, not their value.
Your goal is to be able to replace the piece with something very similar and just as valuable, like-for-like. (My add-on to that goal is; “…without paying so much in premiums that there’s no money left to buy more jewelry.”) In any event, the “like for like” concept is called indemnity. You need to find out how your insurance company achieves indemnity. Only then can you properly compare costs and make your choice of insurance carriers.
Most of us never think to ask how our coverage works. Did the agent who sold you your homeowners’ policy mention what his company could do for your engagement ring or Swiss watch? Did you understand the difference between scheduled and unscheduled coverage? The consequences in the event of loss or damage can be quite different. I know great agents and find that in general they are much savvier than when I first began appraising but I still find those who will tell you – in awfully scary detail – the ins and outs of tornado damage, flood damage, termite damage, locust damage, liability for accidents on your property, grand theft auto and attack by renegade plumbers. With all this to keep track of it’s no wonder: the agent may be completely unfamiliar with the jewelry market and with their company’s actual replacement procedure. Your agent may not know if an appraisal is needed, why it is needed, or what a usable appraisal must comprise.
The most important part of an insurance policy is that you understand it and it is right for you. You can start by asking about scheduled coverage. Ask about a floater or rider. Ask about “Replacement Value,” “Agreed Value,” “Actual Cash Value” Learn their policy on appraisal updates or expiration dates.
Coverage may mean one thing to you and quite another to Pacific All-Risk Insurance (the fictitious insurance company in the scandalous, 1944, film noir Double Indemnity).
I continue to give clients “Ask Your Insurance Agent,” the old list of questions to use when shopping for coverage. It has been circulating Appraiserville for years. I now think this list is too complicated. It is outdated and and thus I summarize it: You must find out how your insurance will replace your item in like kind. Ask. Rates vary. Requirements vary. Question your agent carefully. Protect yourself.