You Lost Your Diamond. Now What?
Imagine you’re on vacation with your fiance. The G, VS2, 1.15 diamond solitaire and platinum engagement ring you’ve never taken off blazes under the Caribbean sun where you frolic in the azure waves and work on your tan. Hours later, after returning to your bungalow, you’re horrified to realize the ring is gone.
Frantically, you both return to the beach searching and praying you’ll find the precious symbol of your commitment to each other in the sand. You don’t. Dejected, you make the best of the trip. As soon as you return home, you make the call to your insurance company.
What happens next depends on what type of insurance, if any, was secured after purchasing the ring. This happens to be a real scenario that happened to a client of mine during my time as the Director of the Insurance Replacement Division at Mervis Diamonds.
Let’s walk through the three typical scenarios (excluding specialized jewelry insurers). A few additional facts to know about the real-life scenario described above. The fiance had bought a jewelry store policy for the ring, however, his soon-to-be bride had secured her own personal insurance.
THE JEWELRY STORE POLICY
Many, many people purchase the “lifetime” coverage offered to them at the jewelry store where they purchase the ring. There is some very key language in these policies that often goes unheeded however, that will void the lifetime coverage. The language shown here is specific to Jared’s policies, but the average jewelry store policy will have something similar.
“We will replace, free of charge*, any diamond, emerald, ruby or sapphire covered by this Guarantee if it chips, breaks, or is lost from its original setting during nominal wear. In order for your Diamond and Gemstone Guarantee to remain in effect, you must have your diamond and/or gemstone inspected and have the inspection documented every 6 months by an authorized representative. In addition, all necessary repairs must be completed by our representatives” (Language from Jared policy issued 7/1/14, emphasis added).
Failure to abide by these terms voids the guarantee.
Going back to my example above, with only a jewelry store policy on the engagement ring, the diamond would only be covered if the six-month inspections had been completed and they had not been. That means the store has no obligation to replace the stone and the setting was never covered. Look again at the language of the policy. It only covers any “diamond, emerald, ruby or sapphire.” There is no mention of the setting.
In this scenario, with only a jewelry store policy, this couple has no recourse except to buy another ring. In order to get a ring of the same like, kind, and quality using the recent Rapaport Diamond Price List published on July 9, 2021, the diamond would be $10,350 and (using a platinum, four-prong solitaire setting available online at Blue Nile) the setting would cost $740. The total out-of-pocket cost to this couple to replace the ring would be $11,090.
Despite purchasing “lifetime” coverage, failure to abide by the inspection requirement left them with no coverage when they needed it most. Note, the best-case scenario is still the $740 cost of the setting out of pocket.
THE STANDARD HOMEOWNER/RENTER POLICY
Another thing I often hear people say when I ask them if they have insurance for their fine jewelry is, “Oh, my homeowner’s (or renter’s) policy covers that.” It often catches them by surprise when I explain why that isn’t necessarily the whole truth.
Yes, a homeowner or renter’s policy typically has a personal item clause, however, the key language to pay attention to here is the “Special limit of liability.”
Looking at my policy from Travelers, my personal property is covered collectively for the total replacement cost of all my possessions. This is how these policies typically work. So, you can see why so many people think they are covered. In this situation, you have to check the Special Limits of liability. In my case, that limit is $1,500 for the entire category of jewelry, watches, and precious stones after the deductible.
Let’s sit with this for a second. If your home was robbed and you lost all of your fine jewelry, let's say five pieces with a total value of $15,000, you are still only receiving a total of $1,500 less the deductible. The special limits are for whole categories, not individual items.
For my couple described above, if the only insurance the bride-to-be had purchased was a standard renter or homeowner’s policy, the couple’s out-of-pocket would have been approximately $10,090.
*$1,500 limit minus a $500 deductible.
Fortunately for them, she had actually purchased a Personal Articles Add-On (sometimes called a Valuable Item Endorsement or Luxury Rider) in addition to her renter’s policy.
THE PERSONAL ARTICLE ADD-ON (PAA)
The PAA is what I recommend to every client I work with and it’s what I myself have for all my fine jewelry. The way the PAA works is you secure coverage for the specific items you want to ensure the ability to replace at their full replacement cost — not their value at the time of purchase.
Typically, you’ll need to provide some proof of cost or an appraisal when you secure the coverage. Your PAA premium is then added to the premium of your base policy. In my case, my coverage per month cost is less than my average single trip to the local coffee shop.
Let’s look again at the scenario above. In this case, the bride-to-be had secured a PAA for her engagement ring. So, when they returned home and called the insurance company, all they had to do was make an appointment to select a new diamond in the same like, kind, and quality as what they originally had. Their insurance company called me, and I worked with them to fully replace the original stone and setting. The total cost to the couple was their $500 deductible.
*Full replacement cost less a $500 deductible
Looking at all three scenarios, even with the best case on the Jewelry Store Policy, the couple’s out-of-pocket would have been more than with a PAA. The PAA offers the most comprehensive coverage of these three options.
The moral of the story, most jewelry store insurance, and standard homeowner/renter’s policies offer little protection in the event your diamond rings or other fine jewelry is lost. Secure a Personal Article Add-On if you truly want to ensure you’re covered in the event the worst happens and you lose one of your precious pieces of jewelry. You’ll be glad you did.
Janet Federico is a personal diamond agent, jewelry consultant, and writer from Washington, DC who has been featured in Elephant Journal, Writer’s Digest, and The Mighty. Want more? Follow Janet and connect with her on social media @DiamondDivaICT.
