Tuesday, October 03, 2006

Insuring your diamond jewelry purchase, is it worth it?

So you saved up enough money to get the 1.5 CT Platinum Diamond Engagement Ring, and on the first day of your honeymoon your new wife notices that her $10,000 diamond engagement ring is missing, help!!!! Did you remember to insure that diamond ring before you gave it to her? Were you debating the fact of having to deal with another monthly insurance premium to add on to your list of bills? Well when you are making any diamond purchase that is more than 1 CT or $5,000 you need to insure your purchase, for those moments when you least expect an emergency. Insurance is just that, protection for your assets and a peace of mind that can only be achieved by knowing the fact that no matter what happens your asset will be replaced or repaired regardless of what happened.

When you make your first diamond jewelry purchase that is over 1 carat in size, do remember that it is best practice to get the diamond insured. Most jewelers will give you an appraisal or certificate when the diamond is of substantial value. If you are making a purchase that is larger than 1 carat in size you should also request a diamond certificate that comes from a reputable independent grading laboratory such as the Gemological Institute of America (GIA), European Gemological Institute (EGL), International Gemological Institute (IGI) or American Gem Society (AGS). A diamond certificate from a reputable grading lab will only have grading characteristics on the quality of the diamond, and will never contain any type of valuation

When insuring jewelry that includes multiple smaller diamonds, or colored diamonds, always insist on the appraisal to explicitly state whether the gems are natural or synthetic, since the valuation will differ greatly. The word synthetic may have disagreeable associations for buyers, so gem manufacturers use a group of terms, cultured, artificial, created, grown, and lab grown, to describe these synthetic gems. Any colored diamond that is ½ carat or larger should come with a certificate from a reputable grading lab such as the GIA, EGL, IGI or AGS.

It is good practice to get your jewelry valuation at regular intervals as diamond prices fluctuate to market trends. It is also a good idea to get your diamond reexamined for valuation if you ever have to send in your jewelry for cleaning or resizing, as a non reputable jeweler may switch the stone and you as a general consumer would never know the difference.

ADF's Insurance Rules of Thumb:

Most Insurance carriers will offer jewelry insurance. A general homeowner’s policy will give you unscheduled personal property coverage which covers jewelry, but the generic policy will usually have a theft limit as low as $500. For higher priced jewelry most insurance companies offer scheduled jewelry insurance to cover specific items. This can be written as a stand alone policy or attached to your homeowner’s policy; the allowed coverage also covers all risks worldwide.

Chubb’s Insurance provides worldwide jewelry insurance specifically covering lost or stolen jewelry. Jewelers Mutual Insurance is another good reference for jewelry insurance. An appraisal might be required at time of insurance of jewelry, please check with your specific agent for specific company requirements.

Premiums vary from state to state and from company to company even within a specified local area. Rates are usually quoted per $100 of insurance, and most policies have just one rate. Some, however, have graduated rates, charging a higher rate on more expensive jewelry than on lower-priced jewelry. If this is your case and you are insuring jewelry over $25,000 we recommend going with a Specified Insurance carrier such as Chubb’s or Jewelers Mutual. By insuring your jewelry with your current insurance carrier should give you the best possible rates, but remember due diligence and do your comparison shopping.

If you file a claim, your options may be:
• repair the jewelry
• replace it with “like kind and quality”
• pay you the actual cash value
• pay you the amount equal to the “cash equivalent” had the company secured repair or replacement
• pay out the item’s scheduled amount.

Not all policies offer all these options. For instance, a policy may allow only repair or replacement, not a cash settlement. Be sure to discuss all options and allowed rights of your insurance contract with your agent. Many people assume that the scheduled amount, usually based on the appraisal is the amount of cash they will receive if the jewelry is lost. This is not the case. The scheduled amount represents the company’s maximum limit of liability or the most it will pay out.

Have copies of the sales receipt and appraisal for the insurer to keep on file. The appraisal should describe the jewelry in detail and give a valuation. Appraisals are often accompanied by a detailed photo of the diamond or jewelry item. If this is lacking, take a photo of the jewelry yourself and bring it along with all paperwork. Also bring any other documentation you may have, such as a GIA Diamond certificate or any secondary appraisals you may have gotten.

In conclusion, insuring your jewelry purchase over $5000 is worth it. Insurance provides you the comfort of knowing your diamond is safe and secure. When purchasing a diamond larger than 1 CT remember to request a diamond grading certificate from a reputable laboratory such as GIA or AGS. Remember no matter how safe and responsible you might be, you never know when an accident can happen, and the proper jewelry insurance plan provides that safety net.

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