Should I Insure My Jewelry and Valuables?
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We're used to buying insurance for the big things in our world – our home, our car, etc. These are standard fare. But they're not the only things in our life that need protection.
Think of the possessions you love most, whether it's your wedding ring or a painting passed down through your family tree. The last thing you want is for something to happen to them. But if a natural disaster sweeps through your home, like a windstorm, they're likely to disappear, become damaged, or even destroyed.
You may think it's all covered under your homeowners or renters policy, but that might not be enough. Whether you have an extensive collection or a few treasures you hold dear, it's important to have insurance that matches their value. Here is what you need to know to safe-keep your valuables::
Does Homeowners Insurance (or Renters Insurance) Cover Jewelry and Valuables?
For the most part – yes. Standard homeowners insurance or renters insurance policies usually cover jewelry and valuables to an extent. Unfortunately, possessions with a high value may be harder to fully protect, though.
Items like jewelry are a risky business for insurers. They're worth more than the average belonging and are also fragile and likely to be one of the first things to go in a theft. Also, they fall into the category of "non-essential" items, which puts them at a disadvantage. So, insurance companies have stricter guidelines with them to ensure they don't lose money in the end.
The valuable must be damaged or lost in a covered event for your insurance policy to kick in. Here are some of the most common types of perils:
Some types of water damage (varies)
Fire or smoke damage
Weather-related incidents, like a hailstorm or lightning
Theft (standard policies stick to a low liability limit of around $1,500)
Let's say you have a family heirloom necklace covered under your homeowners insurance. If a house fire destroys it, you will receive compensation for the loss of your jewelry, but only up to your homeowners insurance coverage limit. But if you misplace the necklace, that is not a covered peril. Your policy can't help you, then.
The type of event that your policy covers isn't the only limitation on insured valuables. Insurance providers will also cap out your coverage on a specific category of items, like watches or jewelry, using sub-limits (which we'll talk about more later). Therefore, if protecting your jewelry is a priority for you, ensure that your insurance company offers exactly the type of coverage you need with options to increase limits.
Options for Insuring Your Valuables
Insurance coverage varies from case to case, no matter the type of asset you want to insure. Because of that, a standard policy may not provide enough protection. For instance, you will find that most typical homeowners insurance and renters insurance policies include a range of belongings under their personal property protection. Some of these items are jewelry or otherwise prized possessions, including furs and heirloom collectibles like coins.
But policies won't always meet your every need. Occasionally, belongings fall outside what your insurance covers. Or, the standard coverage won't compensate you for their total appraised value. Exploring your options will help you protect your valuables to the fullest extent.
Increase Coverage Limits
Every insurance policy comes with limits, regardless of what it insures. Homeowners and renters insurance are no different. But, as you've seen already, that can put some of your possessions at risk.
So, your first route to protecting your high-value things such as engagement rings, is to raise your personal property coverage limits. Your insurance company likely offers the option to raise limits on either overall losses or individual items.
This can be a less expensive method, depending on your insurer, compared to purchasing a rider.
Purchase a Rider
Riders are additional benefits available for purchase that policy owners can use to change the terms of their homeowners insurance. Also known as "scheduling an item," adding a rider lets you customize your homeowners insurance so that it can address your specific needs. These optional add-ons have multiple purposes to help you achieve this.
Depending on the one you choose, a rider can raise homeowners insurance coverage limits, expand coverage on a select property, or add protection to cover more events. Its flexibility gives it the broadest protection for valuable things like jewelry , art, and more. For valuables, scheduling an item allows you to add a specific possession to your policy. This is helpful if the item's value exceeds the sub-limits on your personal property coverage.
In exchange, you pay an extra cost on top of your premium. In addition, your homeowners insurance company will probably require a photo of the item and an appraisal before they add it to your policy.
How Much Coverage Do You Need for Your Jewelry and Valuables?
The easy answer is "it depends!" Choosing the right insurance for jewelry and other valuables requires you to weigh your options and know the value of the items you're insuring.
Valuables like jewelry face two limits in a homeowners insurance policy or renters policy. The first is that personal property coverage has a limit. The percentage varies based on your insurer and policy, but it's usually around 50% of your home's total dwelling coverage amount. (It can dip as low as 20% to as high as 70%, though).
From there, your insurer may also put a sub-limit on specific items or a subset of items. Sub-limits either apply per item or as a blanket limit. For example, insurers often put a sub-limit of $1,500 on stolen jewelry. If it's on a per-item basis, then you'll receive $1,500 for a single piece, whereas a collective sub-limit means you get $1,500 if the whole collection is stolen.
So, these are the values you have to check: the sub-limit amount and the overall personal property limit for your policy.
If you want to ensure all your valuables, then you'll need a catalogue of your possessions and their values. For those who want to insure one or two select items, compare their dollar value to both the sub-limit and blanket limit. If it exceeds either, you may want to think about additional coverage. Likewise, if the dollar amount for your total collection surpasses the policy limit, pursue more coverage.
An accurate inventory of your possessions including jewelry will ensure that you get the right amount of insurance.
How to Access the Best Coverage for Your Valuables
The "best" coverage is the coverage that meets all your needs. That leaves one question: "should I change my current homeowners/renters policy, or should I purchase another policy?"
Many people already have a homeowners policy or renters policy, depending. Banks often require the former to lend a mortgage, and landlords sometimes require the latter to rent from them. In that case, you may be thinking using the policy you already have is enough.
That may work for some. If your possessions don't exceed the policy's limits, you can just stick with that. Still, even if you're fine with the dollar amount of coverage, you may want to also get optional protection like a flood insurance policy. Most insurers don't include that with a homeowners policy, which can jeopardize your possessions.
However, there is another option. You can purchase a separate policy. For example, it's possible to buy insurance specifically for jewelry. Similar to buying a rider for your homeowners policy, jewelry protection insurance insures more extensively. Depending on the type of jewelry protection insurance policy, you may have to pay a deductible and pay a premium based on multiple factors like the items covered and the area of your residence.
Jewelry protection insurance works particularly well for at-risk or high-value jewelry. It covers perils, including natural disasters, mysterious disappearance, and more.
With jewelry protection insurance, you can maximize the protection on your valuables. A separate policy combined with increased personal property coverage on your homeowners policy or renters policy ensures that your belongings are fully protected.
Tips for Insuring Your Valuables and Jewelry
You hold on to your valuables for a reason. Yes, sometimes there is a financial side to it. For example, maybe you are safekeeping a painting as an art investment to sell one day. Guarding your future financial wellbeing is a worthy cause. But many also want insurance for their valuables because of their sentimental value.
Anything, from a grandmother's wedding ring to antique silverware, can be important to its owner. Items like these are gateways to people we've lost and memories we love. That's why it is so vital to protect them properly. Keep in mind a few of these tips so you can ensure it stays that way.
Understand Your Policy
Standard homeowners and renters personal property coverage may not protect all your belongings. Limits also may leave you in a lurch since they don't cover the full value of your amassed valuables. That's why you have to review the contract offered by your insurance carrier before you sign. Also, revisit the policy when new items come into your life or existing ones change value.
If you have any concerns, it's always wise to talk to your insurance agent. They can help you decide if your current coverage is enough.
Get an Appraisal
Understanding your insurance needs requires you to know what you are protecting. You can estimate your valuables' worth, but that can leave you underinsured. Some items may be worth more than you realize.
An appraisal gives you the exact numbers you have to work with. If you learn an item has a higher value than your policy covers, you can decide if you want to purchase more coverage. Like this, an appraisal also helps you decide if you want to insure specific items or a collection.
Keep in mind: collectibles and precious items change in value over time. Hiring a professional periodically will help you keep track of any increases.
Create a Home or Item Inventory
The best way to assess the type of coverage you need is to conduct a home inventory. Essentially, you make a detailed list of your possessions, including descriptions and vital documents like certificates of authenticity. That way, you have an accurate record to give your insurer. You can also use the inventory to help you choose the way you increase your coverage. Since scheduling an item is on an individual basis, you can use your inventory to help review the best possessions for this.
Also, a home inventory will help you in case of a disaster. If a peril destroys your home, it will be hard to know what was destroyed or went missing by memory. Having an inventory takes out the guesswork and makes filing claims easier.
Think About Settlement Type
Before you choose your coverage, consider the settlement type. There are two forms of loss settlement for personal property: actual cash value (ACV) and replacement cost (RCV).
Actual cash value takes into account the item's depreciation. So, if you have a necklace that was originally $1,000 but depreciated by $200, then you would receive $800. In contrast, replacement cost generally equals the original purchasing price of the item. Since it compensates for the property's true value, it's usually more expensive. Options for one or the other may help inform your decision.
You can't avoid every catastrophe that comes your way. But you can do your best to mitigate the losses.
If you have valuables you worry about, take into consideration where you live. Areas with higher crime rates may put you and your belongings at risk. If you do have this problem, think about how you can protect those items. Getting creative with where you store specific pieces may lower the chances of thieves finding them.
Also, take stock of where you live. Disaster-prone areas are, naturally, a threat to your valuables. Make sure to store them in a higher location, since basements tend to flood. But, if you can't avoid the possibility of a peril, add photos to your home inventory. It will help ensure you receive proper compensation for the loss.
Overall, staying on top of your valuables' potential risks and communicating with your insurer are the key to protecting the items you cherish.