Jewelry and Valuable Metals
Welcome to my first blog article! I will be writing about coverage problems and areas of concern regarding your personal insurance policies. Today, my topic covers those items that most people do not think about and do not realize that there is no coverage or limited amounts of coverage on their homeowners insurance policies. If you have a homeowners insurance policy, you probably have coverage for your jewelry; however, the amount you can claim on a loss is very limited.
I once had a client who had taken her wedding rings off and placed them on a sink at a restaurant to wash her hands, which is a very common occurrence. After drying her hands, she noticed her rings missing. They looked on the floor and even took the drain apart but to no avail. Distraught, she called me and asked if there was any coverage on her homeowners insurance. Unfortunately, there was no coverage because loss by misplacement (or mysterious disappearance) is not a covered peril.
How do we fix these problems? There are two ways.
· The first is to increase the limit of jewelry coverage for theft; however, that doesn’t help us if the item is mysteriously lost, misplaced, or something occurs that isn’t a covered loss (named peril).
· The second and best option, in my opinion, is to cover each item specifically or schedule your valuable items as an endorsement to your homeowner’s policy. This does several things for you.
o First, it documents the items existence (sometimes appraisals are required which is a good thing at a time of loss).
o Secondly, it provides a specific amount of coverage for the item.
o Third and most importantly, if scheduled by your agent properly, your jewelry is covered for risks of direct physical loss, except for what is excluded (which is very limited). In addition, there is usually no deductible.
Keep in mind there are some problems with scheduling jewelry. If a claim should occur, the insurance company will settle for the lesser amount of the Actual Cash Value (your jewelry may have depreciated), the cost of repair, cost of insurance, or the amount of insurance scheduled. The issue is with the value of precious metals. Gold and silver have increased dramatically in the last 5 years and appear to be trending higher over the next five years. The prudent thing to do is to have your items appraised each year to have them properly covered until the market settles down a bit. Even during the best and most stable of times, you should re-evaluate the value of your jewelry every other year or so.
One other caveat must be mentioned. Not every insurance policy is created equal. In other words, insurance policies are not the same from company to company. There are policies sold by one company that are much better than those sold by another company and it sometimes is distressing to know the difference.
