Review Your Jewelry Insurance Coverage Every Three Years
Jewelry can rise in value and your insurance coverage should too.
For owners of valuable jewelry, purchasing additional insurance coverage over and above the amount included in their homeowner’s insurance policies can be a wise investment. The typical home insurance will have a jewelry sublimit (the maximum amount paid) of only $1,000. A fairly average gold necklace can have a higher melt-down value. And, if commodities prices run up again, like two years ago when gold soared to $1,900 an ounce, the potential loss may be higher.
Even one of the deluxe policies available in the market may only increase the jewelry sublimit to $5,000 (Chubb) or $10,000 (Ace), and those amounts are still subject to your deductible. At only $1-$2 for every $100 of insured value, raising your jewelry sublimit with additional coverage to better reflect the value of your jewelry collection can help offset the loss of beautiful family heirlooms in a burglary or fire. At Nahai Insurance, we recommend that our clients let us review their jewelry coverage every three years and provide expertise to design a policy to best protect those assets.
We offer these general tips to our clients considering additional jewelry insurance:
Begin with a review of your current homeowner’s policy. Confirm the amount of coverage included with the policy, the amount of your deductible, and how the deductible is applied. Ask your Nahai agent about the cost to increase that coverage within the same policy.
Obtain a current appraisal of your jewelry. If it has been more than three years since any piece was last appraised, it should be revalued by an independent and certified appraiser of gems and precious metals, one who is not offering to purchase the piece or loan against it, which might motivate a lower appraisal. A list of certified appraisers is maintained by both the National Association of Jewelry Appraisers and the American Society of Appraisers. The metals markets can fluctuate significantly in a short time, so it’s wise to check recent market history to determine whether you are benefiting from a recent run-up in price – one that might back-track – or your valuation is more in line with historical norms.
Consider “scheduling” any pieces of significant value. Scheduling an item has the effect of removing it from the sublimit coverage by elevating its status to that of a separate covered item with its own premium component. Again, be diligent in tracking the value of any scheduled item with appraisals every three years or sooner as the carrier is unlikely to adjust your coverage limitation without a request. If its value rises or falls, adjust your coverage amounts to earn the best return on your insurance investment.
Jewelry owners with a sizeable collection, albeit perhaps one comprising many less valuable pieces, may find their best value is a blanket coverage policy. Under blanket coverage, the insured sets a coverage amount for the entire collection and does not have to estimate the value of each item.
Be aware that, even though the price of any precious metal – say, gold – may have risen, it does not necessarily mean that the value of a piece of jewelry containing that metal has risen as well. Depending on the piece and design, the metal contained may represent only a small percentage of the item’s value. Additional value is derived from any gems included and from the craftsmanship of the work. For example, a plain, solid gold wedding band would appreciate more on a rise in the price of gold, being 100% metal, than a thin, exquisitely designed diamond ring.
Inventory your entire collection and document each asset by date, purchase price, seller, and physical description, including pictures of the item and all appraisal reports. Copy and store the information in two secure locations, such as a home safe or a bank’s safe deposit box.
Place rarely worn items in a bank safe deposit box for safe keeping. The carrier may require that you notify them (through your Nahai agent) any time you wish to wear them out in order to qualify for a premium reduction.
For jewelry kept at home, take the necessary steps to prevent loss. Your homeowner’s insurance may provide a discount for installing a home security system. Consider an in-house safe or vault; although not inexpensive, your property is very safe from all but the most skilled burglars. You should also screen all hired help and contractors who will have access to the property. There are several reputable firms that provide a very thorough and convenient screening service through online websites.
Finally, protect the jewelry while you wear it. Beautiful pieces are often fragile or delicate. Gemstones can become loose in their settings after time. Inspect your pieces before and after each use and have weak components repaired promptly.
When you are ready to discuss the results of your personal jewelry assessment, contact Nahai Insurance. We can confirm your conclusions and design an insurance strategy that is best for you.