Do I need to insure this item? And if so, how?
Before we put the cart before the horse, we need to back-track a little first and examine a Standard Homeowner policy. You will want to see where these new additions will be covered under your current policy, and for how much or if you should explore different policies for coverage.
The Standard Homeowner policy does provide some “Special Limits” of coverage on certain types of property and for specific causes of loss. In regard to jewelry(which also includes watches, furs, precious & semi-precious stones), most policies provide for $1,000 for loss by THEFT.
Unfortunately, now comes the disclaimer… depending on the insurance company and/or policy edition that specific company is using at that time, the internal “Special Limit” limitation may be different. However, if a jewelry item is destroyed by a fire, it is still treated as Personal Property or Contents and is then subject to policy terms, conditions, and certain policy exclusions.
So, when you are researching the best possible coverage, you will need to decide the age-old question:
To Schedule or Not to Schedule?
Some advantages of “Scheduling” is that you get:
- Broader Coverage/Open Peril
- No Deductible
- The option to work on a blanket basis or Individually by item
- The ability to do any amount of items
A disadvantage would be having to pay an additional premium and maybe have to get/provide appraisals of some of your items (sometimes an additional cost from a jeweler).
Frequently, an insurance company may request and/or require an appraisal for an item, especially if its value is $2,500 or more, as they want and need to know what they are actually insuring/covering.
An Advantage to NOT Scheduling is you don’t have to pay that additional premium. But then again, disadvantage(s) are any losses are subject to your deductible, limitations on the amount of coverage and the coverage is not as broad.
So, a $400 man’s wedding ring does not have the dollar amount value, as most all of its value is on the sentimental side, which you can’t put a price or dollar figure on. On the flip side, Grandma’s ring that was made in Europe in 1923 and is one of a kind and is valued at $15,000, is an entirely different scenario.
Now, if we wish to schedule this item, what kind of loss settlement do you want… Replacement Cost or Agreed Value?
Let’s take Grandma’s ring from the above example. This ring has an appraised value of $15,000 and you wish to insure it for that $15,000. After all, it’s one of a kind!
In this example, imagine you are at a restaurant and go to the restroom. With a ring of this caliber, you are likely to take off the ring and place it on the countertop next to the sink to wash your hands, while you are attempting to keep the ring in good condition. You may then forget to put it back onto your hand or even have someone try and steal this precious heirloom.
Replacement Cost Settlement has a few different options on the way an insurance company can settle a claim, in the event of such a loss.
- The maximum you would receive is the $15,000 for which it is scheduled;
- or if the insurance company can replace it for $7,500, that is the amount they will pay;
- or if you elect not to replace the ring at all, then you would receive the Actual Cash Value of the ring… which might only be $5,000.
In that same scenario, the Agreed Value essentially states that you would get the full $15,000 the ring was scheduled for on your policy. Please keep in mind, Agreed Value loss settlement coverage does cost more in the way of premium, but most likely you are going to get more in the event of a loss/claim as well.
Jewelry is the most common of additional items to be scheduled, but there are other things that can be scheduled as well, such as:
- Collectables, Collections (Stamps, Coins, etc)
- Fine Arts
- Musical Instruments
- Some types of Sporting Equipment
We can only advise you and give you the information in order to make your own decision. Some of it rests on your own comfort level.
In the event that you are not sure or want more information, We can discuss your specific situation and get you the answers you need in order to know what and when to schedule. It never hurts to be aware and prepared for unforeseen events. Stay on the safe side and contact us today!