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Are you covered if you have a jewelry claim? Not all policies are created equal.


Jewelry has been used to express love, friendship, or wealth for centuries. And for the same amount of time, jewelry has also been misplaced or stolen, so it is crucial to get it appraised. 

Homeowner's, condominium, and renter's insurance policies provide a small amount of coverage for jewelry - usually no more than $2,500 to $5,000 - and your policy deductible applies if you make a claim. Depending on your insurance company, securing more coverage is either done by an endorsement or by taking out a separate Personal Articles policy. In either case, a jewelry appraisal is often needed as a condition of coverage. 

Why is a jewelry appraisal important?

A jewelry appraisal is critical because it provides an expert's assessment of replacement cost, using professionally recognized descriptors of the item's weight, dimensions, cut, and clarity. If there is a claim, the insurance company will use the information in the appraisal to calculate their payment. 

We use the word "calculate" when describing how an appraisal is used in a jewelry claim because the policy language can differ from one insurance company to the next. For example, some policies state that they will pay the lesser of (1) The amount listed in the appraisal or (2) the actual cost to repair or replace.

Consider this claim scenario: 

You get a bonus at work and treat yourself to a new watch. The jeweler provides you with an appraisal that lists a replacement value of $7,500. You call your insurance agent, and the agent provides you with a Personal Articles policy to cover the watch at an annual premium of $115. While traveling a month later, you wear the watch and accidentally leave it behind in your hotel room. The hotel does a courtesy check of the room but informs you they cannot locate your watch.

Outcome #1 

When you file your claim, the insurance company reviews the appraisal and shares a copy with a jewelry wholesaler. The wholesaler informs the insurance company that they can replace the watch for $5,500. Even though you paid for $7,500 of coverage, the insurance company settles your claim for $5,500 and instructs you to get the replacement from the wholesaler.

Outcome #2

When you file your claim, the insurance company reviews the appraisal and shares a copy with a jewelry wholesaler. The wholesaler tells the insurance company that the price of gold has skyrocketed, and the current cost to replace the watch is $9,500. Your claim will be settled for the appraised amount of $7,500. 

This is how many insurance companies provide coverage for jewelry or other valuable items, like fine art. Better coverage is available from insurance companies that specialize in either jewelry coverage or higher-valued homes. Their Personal Articles policies typically include (1) Agreed Value Coverage, (2) a cash-settlement option, and (3) Market Appreciation Coverage. 

Better coverage means a better outcome

When you file your claim, the insurance company reviews the appraisal and sends you a check for $7,500. If the cost to replace is more than $7,500, they will pay up to 150% above the appraised amount ($11,250), provided you replace the item. 

Simply defined, insurance is a written promise to pay if something bad happens. In exchange for your premium, the insurance company assumes all or most of the risk on your behalf. The policy you buy is the promise, but you must know what you're buying. It is vital to find an insurance agency that provides you with different options to choose from and who can clearly explain how those options work.

The Plexus Groupe is an independent insurance advisory firm. As a broker, we work with insurance companies to find the best coverage to meet our clients' needs. Is your jewelry adequately covered in the event of theft or loss? Contact David Miller at 847-307-6141 to discuss your personal lines coverage.


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David Miller is The Plexus Groupe’s Vice President Client Executive for Private Client Solutions.