Jewelry and Gemstone Insurance: Nine Questions You Need to Ask

1. Can I Choose the Jeweler Who Will Replace My Jewelry?

Unless there's a clause in your policy indicating you can go to the jeweler of your choice to have your item replaced or repaired, your insurer will likely choose the jeweler. As Ron Campbell of Central Coast Gem Lab explains, insurers calculate their premiums based on the assumption they'll pay much less to replace the insured item than you will because of their volume buying power.

In your lifetime, you may buy one item, or two, or four, or six. Your jewelry and gemstone insurance company buys hundreds every month. They expect, and receive, volume discounts from their suppliers for the items they buy.

2. Can I Have the Replacement Item Independently Appraised Before I Sign a Release?

Your insurer likely won't pay for an independent third-party appraisal of a replacement item. However, this is the only way to ensure you're getting a replacement of the same quality and value as your original item from your insurer and their jewelers.

3. Do I Need an Appraisal for Coverage?

You'll likely need a jewelry and gemstone appraisal to add a rider for more coverage on your homeowners insurance or for a new policy specifically for your jewelry pieces.

Scheduled items (those on riders) usually don't appreciate. Therefore, it's advisable to have scheduled items reappraised every three years. Otherwise, if you have the misfortune of damage or loss of an item whose market value has increased, you may be stuck with a replacement value that may not cover the cost to repair or replace it.

Ask prospective insurers if they ever depreciate the values of insured items and on what basis. In this situation, you'll want to avoid paying premiums for items based on outdated values higher than current market value.

4. What Will My Jewelry and Gemstone Insurance Policy Cover?

Make sure you understand your coverage. Ask about the following topics:

"All Risk" vs "Named Risk" Policies

Some policies may be "all risk," meaning they cover a wide range of incidents. "Named risk" policies covered specific incidents only. You may have to add coverage for specific risks. Before you buy any policy, learn what it covers and what it excludes. Well-known risks handled by insurances include damage, loss, and theft. However, you should consider other risks, too.

"Mysterious Disappearance"

Ask if your policy covers "mysterious disappearance" and how it's defined. For example, if your insured items turn up missing and you have no idea how that happened, or even when it happened, your insurer could consider that a mysterious disappearance instead of a theft. If your policy excludes mysterious disappearance, you won't be covered.

Other People's Accidents

Other risks include the actions of other people who may possess your items legitimately. Does your policy cover loss or damage that occurs while in the care of a jeweler? Are you covered if you loan your jewelry to a friend or child and the pieces are lost or damaged?

Pair and Set Clauses

If you're insuring jewelry made as pairs or sets (such as earrings, wedding bands, or other ensembles), ask about pair and set clauses. Some policies may replace the entire set if one item is lost or damaged (either creating a new set or paying a specified cash amount, depending on the policy). Other policies allow the insurer to repair or replace an individual item in a set.

Replace or Repair?

Ask about your options in case you file a claim. If a piece is damaged, can you choose to have it replaced instead of repaired? If you insured a unique piece, such as an irreplaceable antique, how will your claim be resolved?

5. What are My Responsibilities?

Are there any special precautions you need to take against risk? Does the policy require specific security measures on your part, whether at home or while traveling? If there's negligence or carelessness on your part, how might that impact your coverage?

In order to file a claim, what proof of damage or loss do you need to present? In the case of theft, do you have to file a police report?

6. Do I Have the Option of a Cash-Out in Case of a Loss?

If you've insured an item and are paying a premium based on its replacement value, you likely won't get the replacement value in cash. If your policy has a cash-out option, it'll likely be significantly less than the replacement value. Cash value insurance is a more expensive and uncommon option but will give you the most flexibility when choosing how your pieces are repaired or replaced.

7. How Much Will My Jewelry and Gemstone Insurance Policy Cost?

Read our article on gem and jewelry insurance quotes.

8. What is the Insurer's Financial Strength Rating?

Before you purchase any insurance policy, check the company's Best's Financial Strength Rating (FSR). This is a measure of its ability to pay claims. You should try to do business with companies rated "A" or better.

Finally, a question for you:

9. What If I Don't Like the Answers I'm Getting from a Potential Insurer?

Keep shopping. Jewelry and gemstone insurance is a big industry but it's also a product. Purchase the policy that'll give you peace of mind and protect your investments. You have many options to consider as long as you're asking questions.