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Typical Insurance Policies
Renter's and homeowner's insurance policies set limits for the loss of certain categories of personal property, including jewelry. Homeowner's policies typically pay a maximum of $1,000 for jewelry theft only. A renter's insurance policy might have a lower limit for jewelry loss--$500 is common. Policies vary a lot from state to state so check yours.
Almost all insurance companies have the option of replacement of the item. If a piece of jewelry is lost, most insurance companies DO NOT give you money. It is their responsibility and obligation to put you back into the position you were in BEFORE the loss. Because insurance companies do millions of dollars a year in jewelry replacements, they can purchase the wedding jewelry for much less than a consumer. Most insurance companies will only pay the current replacement value so if you are over-insured you are paying unnecessary premiums. On the other hand most insurance companies will only pay up to the covered amount so if the current value is higher, you are under-insured and will have to pay the difference. People get their wedding jewelry appraised most often for jewelry insurance purposes. It is important to make sure you are insuring your diamond engagement ring or wedding bands for the correct value. Unfortunately, some jewelers will sell a diamond engagement ring at one price and then assess the value at a much higher rate. It may make it look like you have gotten a deal on the diamond engagement ring, but now you will be paying much more to insure the wedding jewelry than it is actually worth. "It's an inflated value," says Paul Jacobs of Ascot Diamond Trading. "Insurance companies don't care what value gets put on an appraisal, because that just means you're paying more for the insurance." * In the end, the diamond engagement ring or wedding band is worth what it is worth and having an inflated jewelry appraisal doesn't change the value of the wedding jewelry.
When making a claim on properly appraised and insured jewelry:
. If the policy is a replacement type insurance policy, the jewelry insurance company may have the option of sending you to a replacement center diamond of their choice. Remember, you should have the replacement jewelry checked by your local independent jewelry appraiser to verify that the quality of the diamond is acceptable based on the original jewelry appraisal. You may have the option of using your own jeweler, especially when original designs or copyrights are involved. Even then, you have the right to have the replacement jewelry verified for quality based on the original independent jewelry appraisal.
. If you choose the option of cashing out rather than replacement, the type of policy will dictate how the cash-out offer works. With an Agreed Value policy, you will receive a check in the full amount of the insured value. With a Replacement insurance policy, you will receive either the insured value or the actual cost that the insurance company would have to spend to replace the item, whichever is lower. Since insurance companies are volume purchasers, they often receive a discount, so be prepared to be given a lower offer than the insured amount. Your independent jewelry appraiser can assist you in determining if the cash offer is fair market value.
. Is a jewelry appraisal required prior to obtaining insurance? Are there only certain types of appraisers whose reports are accepted? Are the items covered no matter where they take place? Would a jewelry insurance policy cover you for a loss that occurs during domestic or international travel? Are items covered for full replacement cost? Must you replace the item, or can you obtain cash settlement? Does the insurance policy cover repairs to damaged jewelry? Is there a deductible? If so, how much is it and how does raising or lowering the deductible affect your policy costs?
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