Insuring Your Jewellery

Here are some tips and guidelines for ensuring that you get the 'most appropriate' insurance premium that will ensure you are put back into the same position in the event of loss or theft of your jewellery.

The very first step you should take with regards your jewellery is to ensure that it is 'fully' described.

What does this mean?

Ensure you have a set of photographs that show enough detail of the articles. If your camera allows, set it to print the date on the photos. Ensure your gemstone are certified. You should have a diamond grading certificate for your diamonds and similar certificates for any other valuable gemstone. Make sure you have an up-to-date valuation or appraisal certificate for your jewellery.

This documentation will assist you in ensuring your jewellery gets replaced with items as close as possible to your existing pieces.

The next step is to ensure that your jewellery is valued 'correctly.' This means that the appraisal or valuation certificate should reflect a value that will ensure the full replacement of the articles as described by the documentation in step 1. Remember that with diamond jewellery, most of the value is in the diamond itself. Then comes the workmanship and value in the supplying retailer or jeweller and then the metals and other components.

When obtaining your valuation, decide whether you would like the item to be replaced by the jeweller at which you originally purchased the item, or from any jeweller. Make sure your valuer takes this into consideration when producing your valuation.

The simplest way to confirm if the valuation is adequate, is to call a few jewellery stores, describe the diamond and article of jewellery and ask for a quote to purchase such a piece. After all, that is what you would do if you were looking to replace a lost or stolen item.

A good rule of thumb is the best value for insurance replacement is your invoice value! Consider this, if you purchase a diamond ring for $10,000 what is it likely to cost you to replace if you lose it within the next year? The simple answer is $10,000. Therefore your valuation should be only slightly higher than the $10,000 paid, allowing for fluctuations in diamond and metal prices as well as inflation.

Many people love to see 'high' valuations for newly purchased diamond jewellery. It makes you feel like you have really got a bargain. Take the example above, assuming you purchased the diamond ring for $10,000 at a '50% off' sale. The ring comes with a $20,000 valuation certificate! How does this affect your insurance? What should you think about the valuation?

Well, firstly, you may think you got a great deal! I would suggest you do your own research to confirm this. Call a couple of competitive jewellery stores and ask them what you could expect to pay for the ring? Would you pay $20,000 elsewhere or are other stores also charging around $10,000. Do you still think you got a bargain? Note that when making such comparisons, always ensure the diamonds are certified by a recognised diamond grading laboratory!

Ok, so you have established that this diamond ring would likely not cost you $20,000 to replace, but rather $10,000. What should you insure the ring for? Remember that in the event of a loss, the insurance company will only have to fork out $10,000 or less (this will be explained later) to replace the item. Also your premium is based on the value insured, so would you like to pay double the premium for half the insurance? I know I would not.

You are now in a position to shop around for insurance. You should first check you home contents insurance policy. Speak to your current insurer to determine if your jewellery is covered under this policy. Check the insured limits for jewellery under this policy. If this policy provides you with adequate cover, simply keep your documentation in a safe place in case you need it.

If you are not covered under you household policy, you should now shop around. Firstly get quotations from your current insurer and broker. Also find out which other insurers provide specified item jewellery insurance. Get quotes from them too. When comparing these quotes, do not only look at the premiums charged. Also consider the features and restrictions on each of the policies. Check whether you would be insured outside of the home, interstate or overseas. Check whether you are insured for loss, damage and theft. Check whether you simply get paid out or if the insurer sources and provides the replacement jewellery.

Many insurers will not pay you out. They will endeavor to replace the jewellery themselves. The reason they do this, is they have working relationships with many retail and wholesale sources and are able to replace the goods at a price far cheaper than the retail price you paid. This is another reason why paying premiums on a valuation of $20,000 when you paid $10,000 is not a clever move. The insurance company is likely to replace the goods for something closer to $8,000!

Once you have picked your insurer and policy make absolutely certain that you submit the insurer copies of the following documents:

- The original purchase invoice
- The valuation certificate
- The grading certificate
- Photographs of the item

Visit us at www.gemex.com.au for more diamond jewellery advice.