An important proposal: Insurance for an engagement ring

The ringing of Christmas bells can turn into the chiming of wedding bells, as Christmas is a wildly popular time for wedding engagements. According to a recent survey by wedding planning site TheKnot.com, 39 percent of all proposals occur between November and February, with 16 percent happening in December alone.

Whether you’re currently shopping for the perfect ring or you’ve already placed that sparkling diamond on your or your bride-to-be’s finger, it’s time to consider how you’re going to protect the investment.

Here are four tips on properly insuring your bling.

1. Get it appraised.

Engagement rings are, in a word, expensive. According to XO Group Inc. (owner of TheKnot.com and WeddingChannel.com), the average cost of an engagement ring in 2011 was $5,200. engagement_ring

But even if you know exactly how much your fiancé spent, you must have the ring appraised by a certified gemologist to obtain insurance.

“This is so the insurance company knows exactly what is being insured and for how much,” says Elaine Simon, manager of deBebians Fine Jewelers in Los Angeles. “An appraisal is a document that provides all the specifications of the ring, including a photo, and will state the current retail replacement value. We encourage our clients to have the ring reappraised every five years, to accommodate rising diamond, gold, platinum and labor prices.”

Contact your jeweler to find out where to get the ring independently appraised, as the insurer will want an appraisal from someone other than your jeweler.

2. Don’t rely just on your homeowner’s insurance.

While a basic homeowner’s, condo or renter’s policy should provide ample protection for most of your possessions, it may not do the trick for certain valuables like an engagement ring, says Jeff McCarthy, manager of Harrington Insurance Agency in Massachusetts.

That’s because there are strict limits on what’s covered. For instance, most standard homeowner’s policies provide between $1,000 and $1,500 worth of coverage for jewelry, watches and furs.

“And that’s not $1,000 per item, but $1,000 for the entire claim,” McCarthy says. “That probably won’t be enough for an engagement ring.”

McCarthy says the simplest (and typically least expensive)solution is to buy an endorsement, or add-on, that will upgrade your homeowner’s, condo or renter’s policy. Most insurers offer them, and they’re marketed under various names. An endorsement (sometimes called an enhancement) to a homeowner’s policy might give $5,000 worth of protection for jewelry and furs, $5,000 for silverware, and some coverage for antiques and fine arts.

Endorsements cost anywhere from $2 to $15 a year for every $1,000 of insured value. So an endorsement on a $5,000 ring would mean an additional $10 to $75 a year on your homeowner’s insurance premium.

3. “Schedule” it.

Insuring your ring under your general homeowner’s insurance policy— even with an endorsement — means you’re covered only for specific losses, such as fire, windstorm and theft.

“If a diamond falls out of your ring and gets lost, you probably won’t be able to collect anything unless you’ve scheduled it,” McCarthy says.

“Scheduling” is just another way of saying that you’re adding a rider(or clause) to your homeowner’s policy to cover specific valuables. And it has a few advantages.

For one thing, it covers all risks. That means if the ring gets flushed down the toilet, is swallowed by the family dog or slides off your finger while swimming in the ocean, it’s covered.

Secondly, there are no deductibles on scheduled items. That means if the ring is stolen, destroyed or lost, the insurance company will give you a full payout for its value.

The cost of adding a scheduled item to your insurance policy varies by what kind of item you’re insuring. For instance, scheduling jewelry typically costs $12.50 for every $1,000 of value. So a $2,000 ring can be protected for just $25 a year.

“When you shop for a ‘ring rider’ policy, make sure to read the fine print,” says Laura Gilbert, a blogger for TheKnot.com. “A good policy will cover every potentially ring-threatening situation from theft to damage to accidentally dropping it in the garbage disposal.”

4. Buy specific ring insurance.

If you don’t have homeowner’s, condo or renter’s insurance, you always can buy insurance just for the ring itself.

Most major insurance companies will sell you something called a valuable articles policy, which insures specific items like jewelry, fur coats or valuable antiques. But if you want to get even more specific, certain insurance companies specialize in jewelry insurance — and it’s not that expensive.For instance, Jewelers Mutual Insurance Co. will insure a $6,000 engagement ring for $90 a year (and that’s without a deductible).

If you decide to buy this type of policy, Gilbert recommends asking these questions:

  • Is the ring covered if you lose it accidentally, or only if it’s stolen?
  • How will the company replace the ring? Some companies will write you a check after filing a claim. Others may insist you buy a replacement ring through a certain jeweler.
  • Is the ring insured for the full cost or just a fraction of it? You want to make sure the entire cost is covered, Gilbert says.
  • If you need to make a claim for a ring that has disappeared, what kind of proof will the insurer need? Most insurers will require both the initial appraisal documentation and the original receipt (provided they don’t already have it in their records).
  • Are there any circumstances that aren’t covered? “You want coverage for everything – even if your ring flies off at the circus and gets trampled by elephants,” Gilbert says.

  • T S said

    Some good tips in this post. I'd add that you should also consider shopping for engagement and/or wedding ring insurance with an independent insurer because they will take the time to shop a number of providers. This way you'll get the best deal without having to waste time with each individual insurer yourself.

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