7 guidelines for insuring an engagement ring

Not sure how to protect your heart and wallet if an engagement ring -- a common Valentine's Day surprise -- is damaged, lost or stolen? We can't help you with the heart part, but we can help you with the wallet part. Here are seven tips to simplify the process of insuring an engagement ring or other pieces of jewelry.

1. Home insurance isn't always adequate.

If you have a home insurance policy, chances are your jewelry is covered by it. The problem is it might not be enough coverage.

“When it comes to expensive jewelry, stand-alone policies are best,” says David Hendry, chief underwriter of the Jewelry Insurance Brokerage of North America.

engagement ring insurance Although personal property not itemized on your home insurance policy includes jewelry, it may not be sufficient coverage for jewelry valued at $1,000 or more.

Home insurance is great for replacing jewelry that's been stolen. However, it won’t be much help if jewelry is damaged or misplaced. The solution? Buy a separate policy for your jewelry. A stand-alone policy usually offers broader coverage, Hendry says. Home insurance policies don’t cover things such as a chipped diamond or a ring that gets flushed down the drain; stand-alone policies may cover them, however.

2. Not all jewelry insurers are on the up-and-up.

With so many jewelry insurance companies out there, it’s hard to tell which one is right for you. And just because the jeweler recommends a policy doesn’t mean it's good. In fact, you may want to avoid a jeweler-recommended policy altogether. Why? Some jewelers may get a cut of the deal for referrals to certain insurers, according to Hendry. To find out whether this is the case, ask the jeweler.

3. Cash is not always an option.

A cash option may be your payout preference, but it’s not always available to you. When buying insurance, ask how a ring or another piece of jewelry would be replaced. Some insurers may write you a check, while others may demand you get a replacement at a specified jeweler.

4. Prices vary.

Premiums vary from state to state, but if you live in a big city such as Miami or Los Angeles, you may be getting the short end of the stick. Residents of big cities can expect their jewelry insurance rates to be higher than average because of the higher risk of theft, Hendry says. However, stashing your jewelry in a safe or vault may help lower your premiums. Generally, you can expect to pay a premium of 1 percent to 1.5 percent for a stand-alone jewelry policy. This means that if a ring cost $5,000, you'd pay about $50 a year to insure it.

5. Appraisals count.

In most cases, you must get jewelry checked out by an appraiser before you can get coverage from a jewelry insurance company. Factors considered in appraisals include the type of metal and the number of diamonds or gemstones.

Certified appraisers determine the retail value of an item as opposed to an inflated value. Why does it matter? Barbara Nevius, a trained appraiser and gemologist in New Jersey, says that giving an inflated value is unethical. An inflated value typically is provided by a jeweler or unqualified appraiser to boost a customer's ego, Hendry says. Settlements of insurance claims are based on the retail replacement value of a piece of jewelry, not on its inflated value.

To get a proper evaluation, you should use an appraiser who has received training from an accredited, reputable organization like the National Association of Jewelry Appraisers, the Gemological Institute of America or the International Society of Appraisers.

Once the assessment is done, you'll receive an appraisal report, a photo of the jewelry and a description of the jewelry -- all of which you can hand over to your insurance company.

6. Up-to-date records are critical.

Without up-to-date records, your insurance policy may do you no good. Make sure appraisals are done regularly; some insurers require it every 18 months, as the value of jewelry may rise over time. Also, be sure to give the insurance company your new address if you've moved.

Here's another wrinkle to keep in mind, courtesy of Hendry: “If a guy buys insurance for an engagement ring under his name, that ring no longer has coverage once he proposes and his girlfriend says 'yes.' From the moment the girlfriend says 'yes,' he is no longer the property owner and has no insurable interest.”

To remedy this situation, Hendry suggests notifying your insurance company of the change as soon as possible. Better yet, put the future bride's and future groom's names on the jewelry policy when it's purchased.

7. Sentimental value is not insurable.

Your attachment to Grandma's heirloom ring may prompt you to shop for insurance, but Hendry warns that "sentimental value is not a valued asset." So you've got to insure that ring for its actual value, not its sentimental value.

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