Insuring Your Diamonds The Right Way

Diamonds are the priciest gemstones in the world. The stone has a distinct beauty on its own and even more when fixed in a setting as an engagement ring or a pendant. Some people like it set in a piece of jewelry while there are others who prefer the pure aesthetic value of the diamond as a loose stone. But whether it’s set in a jewelry or as a loose diamond, people who own this stone would want to keep it protected from theft, loss or other casualty by having them insured.

Jewelry, in general, is covered by many insurance companies. One way of having your jewelry insured is by applying for scheduled coverage. This provides additional insurance for specific items no matter how it gets lost whether stolen or caught up in fire. On a standard homeowner’s or renter’s policy, jewelry is usually covered for so-called named perils such as theft and fire.

Loose and unset stones, on the other hand, are covered by only a very limited number of insurance firms. For people looking for an insurance company to cover their loose diamonds, one of the few option is the Chubb Insurance Company. The firm insures specialty items including loose precious stones. However, clients should expect to pay a high monthly premium for the policy.

Insurance companies have a few reasons for not willing to provide coverage to loose and unset diamonds. Firstly, loose stones which are not set in a piece of jewelry have a great chance of getting lost or misplaced. These stones are only kept in a certain container and therefore, are easier to misplace than those set in a necklace, ring and earrings.

The second reason why only jewelry is given insurance coverage is due to the fact that replacing loose diamonds entails a lot of money. Being loose stones, they can get lost easily compared to those set in a piece of jewelry and paying for their replacement means a huge sum of money to be shelled out by insurance companies. And so, these firms find it fit not to insure loose, unset diamonds at all.

There are three types of diamond insurance. These are the actual cash value, replacement value and agreed value. Actual cash value refers to diamonds that are insured at current market rates not taking into account what you paid for in getting the stones. Replacement value pertains to the replacement of a diamond you lost by an insurance company but only to a limited amount. This is the general preference of most insurance companies. With this type of coverage, many insurance companies will replace lost items through a firm of their choice. In case you use this policy and your insurance firm has a preferred replacement jeweler, make sure that you take the replacement item to an independent appraiser to confirm that the new item matches the old one in terms of grading and value.

It’s also important to note that with their strong buying power, insurance companies will normally replace your diamond for less than the appraised value when you choose a replacement value policy. This results in you paying a higher premium.

Agreed value refers to an agreement reached between a diamond owner and insurance firm on the stone’s value. The company here agrees to pay the agreed value in case of loss. This type of insurance may be rarely offered but very beneficial. The policy holder, though, just needs to pay a higher premium.