You just a spent a nice chunk of change on a beautiful diamond and now you’re wondering if you should insure your investment, huh? After all, we insure other things that we care about. You know, like Heidi Klum did for her legs.
Policy 1: Unscheduled Property
Many home owners and renters insurance cover up to 50% on what is called “unscheduled property.” So if you have a $100,000 policy, you can be reimbursed up to $50,000 on any items within the living areas that you claim. That means if there’s a burglary, flood, or fire you would claim your jewels with other possessions like your TV, clothes, and iPhone.
Policy 2: Scheduled Property
If you have a diamond that is worth more than that policy or don’t already have insurance, then you may want to look into insuring your gem. When taking a policy out on your diamond, you are purchasing “scheduled jewelry insurance.”
Typical coverage under a scheduled or “personal property” plan normally costs $1 or $2 per $100. Therefore, if you insure an item for $10,000, it would cost either $100 or $200 a year.
If you already have a homeowner’s policy, you can add this onto your current policy. A lot of insurance companies offer discounts if you get additional coverage with them. See, not all insurance companies are so bad!
What Do I Need to Get Insured?
When you purchase scheduled jewelry insurance, you are going to need four things:
- Original receipt. Any official document is best drafted with original documentation. But not everyone can present one, especially if it’s a family heirloom that you’re trying to insure. You’re going to need an appraisal done anyway, so that will cover the need for the receipt.
- Appraisal. Appraisals are important because it tells the insurance company the true value of the gem. Most insurance companies will not accept an appraisal from the jeweler who sold the diamond.
- Pictures. Like you didn’t take hundreds already! Pictures usually come attached to an appraisal, but it doesn’t hurt to have a few copies for your own records.
- Certificates. This is the document that contains the diamond’s grade. You should receive this when you purchase your diamond.
Read the Fine Print!
Like any fine print, make sure you know what you are signing. Policies have a range as to what they will cover. Most policies have one or few of the following:
- Repair the stone
- Replace the diamond with something close to it
- Pay the actual cash value
- Pay you the scheduled amount.
It is important to figure out which of these are under your coverage. Some insurance companies will only repair or replace your jewelry instead of a cash payment. This is done at a benefit to the jeweler, not the consumer.
If your policy pays out the scheduled amount, that does not mean you will be getting the amount you were diamond appraised. A policy paying out a scheduled amount is the maximum an insurance company is liable for. You need to determine if that amount justifies taking out the policy to begin with.
If your policy pays out an actual cash value (ACV), that total value is based on how much diamonds are currently worth. Remember, a diamond is considered an investment. That means prices will fluctuate, although not as much as other commodities such as gold.
You need to do what is best for you. If you already have homeowners or renters insurance, consider the value of the rest of your property. That policy may be sufficient for you.
If you do decide to go ahead and get insurance, please look at what you signing. The good ol’ terms and conditions! You need to know exactly what your coverage will be.