Engagement Ring Insurance: One key coverage difference you should know about
By Kurt Thoennessen, CAPI
There are many helpful articles that discuss the benefits of obtaining special insurance for your engagement ring. They discuss concepts such as agreed value coverage, not relying on your homeowners or renters insurance, and worldwide coverage. These are all important concepts to understand, but the actual policy language is important as well.
This article will reveal a few key differences in policy language between two major insurance company’s engagement ring policies. This will help you better understand how these insurance policies differ so you can make an informed decision about which one to purchase.
How will your claim be settled?
The first policy section you should be concerned with is the loss settlement section. There is nothing more important in an insurance policy than how a settlement will be handled when you have a claim. Below are excerpts from engagement ring/jewelry policies provided by two major insurance companies, which convey how each company will settle your claim. Feel free to skip to the Jargon Translation below if legalese puts you to sleep.
Company A (referred to as “we” and “our”)
Our Loss settlement options – “we” may at “our” option:
- Repair, replace, or rebuild the “covered property”; or
- Settle based on the actual cash value of the “covered property” at the time of loss.
“We” may take all or part of the damaged “covered property” at the agreed or appraised value. “Covered property” that “we” have paid for or replaced will become “our” property.
How much we pay
The amount of loss settlement – we pay the least of:
- the amount determined in paragraph 6 under how much we pay;
- “Our” cost to repair, replace, or rebuild the “covered property” with material of the same kind and quality, to the extent practicable; or
- The coverage amount shown
When “we” repair or replace the “covered property”, it will be from the stock of the jeweler from whom the “covered property” was purchased or another jeweler who is approved by “us”.
For a covered loss to an article listed in your schedule of itemized articles, we will pay as follows:
Total loss. If an itemized article is totally destroyed or lost, we will pay the amount of itemized coverage for that article. However, if the market value of the itemized article immediately before the loss exceeds the amount of itemized coverage for that article, we will pay its market value immediately before the loss, up to 150% of the amount of itemized coverage for that article, but not more than the maximum amount of coverage.
There are two major differences in the language above to be aware of:
- Company A will repair or replace your jewelry item OR pay you the “Actual Cash Value” of the ring. Company B pays the amount the ring is insured for and maybe more.
- Company A sets guidelines for where you can purchase a replacement ring and Company B gives you a cash settlement.
Which losses are not covered?
The next policy section where significant differences appear with engagement ring policies is in the Exclusions section. All jewelry policies are going to cover the basics, which are loss due to theft, mysterious disappearance (losing the item), accidental damage, etc. Yet, some policies have exclusions that others do not, which makes one policy broader and possibly more suited to your needs. Here are two exclusions that are found in Company A’s policy, but not in Company B’s.
Company A (referred to as “we”)
Wear and tear – “we” do not pay for loss or damage caused by wear and tear. However, “we” will pay for the following which are caused by normal wear and tear:
- Prong re-tipping;
- Broken, worn or bent prongs;
- Broken earring posts;
- Clasp replacement;
- Restringing of broken or stretched pearl strands; and
- Stone tightening
Vermin, rodents, or insects – “we” do not pay for loss or damage caused by vermin, rodents, or insects.
The exclusions listed under Company A do not appear in Company B’s policy.
Company A includes these exclusions in their contract while Company B does not. This fact makes the coverage from Company B broader.
Differences in rates
Another difference is the cost of the policies from Company A and B. Company B is typically going to be more than Company A because it offers broader coverage.
Most people know that price is not the only factor to consider when purchasing insurance and the differences in policy language mentioned above demonstrate that. The goal should be to purchase a policy that matches your needs and desires with respect to coverage and price.
This information should help guide you in the right direction, but working with an insurance expert who can answer your questions and put your mind at ease about your insurance protection is a critical piece of the insurance buying process.
InsureScope.com is an insurance buying platform where you can complete a quick quote application for engagement ring insurance and then speak with an expert to answer your questions. The process is quick and easy as well as personalized to your needs. Please feel free to visit the quotes page of the site and click on the engagement ring button to start your quote. Once your information is received, a jewelry insurance expert will contact you to provide you with a proposal and advice for your engagement ring insurance.
Kurt is a Senior Advisor with InsureScope and a Certified Advisor of Personal Insurance (CAPI). He works with high net worth individuals and families to design and implement risk management and insurance programs.