Diamonds are forever—until your engagement ring slips down the drain while you’re washing dishes, or a thief swipes the necklace your grandmother left you. And while your homeowners’ or tenants’ insurance will kick in, it won’t reimburse all that much.
Standard coverage is minimal, often capping the reimbursement for jewelry, watches and furs to between $3,000 and $6,000 for all your belongings in that category. The Co-operators, for example, has a $6,000 maximum, with a $4,000 maximum for any one item.
If you have a substantial jewelry collection or even one watch with a lot of sentimental value, it makes sense to buy an endorsement on your home insurance policy to make sure the gems are covered.
Premiums for these add-ons typically cost between 1% to 2% of the insured item’s value, though this varies depending on the theft levels in your area and whether you have any home security systems. So insuring the engagement ring your fiancé bought for $8,000 could cost between $80 and $160 each year.
Endorsements for jewelry and watches typically cover the item’s replacement value, which often increases over time. So while a receipt works when buying coverage for a newly purchased necklace, your insurer may require a new appraisal from a certified gemologist every five years.
Keep the appraiser’s report on hand: it includes a detailed description, magnified photographs and a current replacement cost estimate, and comes in handy if you need to make a claim. It doesn’t hurt to take your own photos, include all jewelry in your home inventory, and keep the receipt. Of course, if you bought the piece on sale, you’d want an appraisal so it’s not under-insured.
While insuring jewelry through your home insurance is handy, it will lapse if you move. So don’t forget to add the endorsement to your new home’s policy.
Alternatively, you can buy separate coverage for your jewelry. It can be more expensive, but if you have to make a claim, premiums for your main home insurance policy won’t be affected.
Whether you add an endorsement or shop for a new policy, check to see what’s covered. Maybe the policy will kick in if your ring is damaged but not if you lose it. According to a policy from Aviva, jewelry, watches and furs are insured up to $6,000 in total, but 11 exclusions are in place. These include fire, lightning, riots — and theft.
On the other hand, an individual jewelry policy from Jewelers Mutual, for example, kicks in whether you lose an earring, a stone falls out of a ring, and even mysterious disappearances. That’s when you just don’t know what happened to a piece of jewelry. Maybe you forgot to lock the front door or maybe your least-favourite cousin “borrowed” it. So even if you have suspicions but no proof, the policy will pay out.
It’s also a good idea to check if there are any restrictions on how the claims process works. Some insurance companies require you to use a jeweler of their choosing to fix damaged items or to recreate lost or stolen items. Others are much more flexible: Chubb, for example, simply sends successful claimants a cheque. The policyholder can buy the exact same necklace, a completely different piece of jewelry, or sock the money in a high-interest GIC.
To estimate your insurance costs, get a home insurance quote.
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