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Insurance questions


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Hi, so I bought the ring!  I ended up going with a "signature" diamond from Blue Nile.

I have a question about insurance. Does a regular renter's insurance policy cover it?  Do I need special insurance? 

I started researching jewelry insurance, but I noticed the price of the insurance is based on the much higher appraisal price, and not on the actual price I paid for it, which makes the insurance more expensive.  Is this a scam?

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‘Scam’ is a harsh word but, basically, yes.


What the insurance company is usually agreeing to do in the case of a loss is to replace with ‘like kind and quality’, or words to that effect, in the case of a loss.  What they’re NOT agreeing to do is cut you a check for the face value of the policy.  That’s a point of confusion for a lot of people and it leads to the scam question you’re asking.  The appraisal is setting the maximum limit of liability, not the expected budget in the case of a loss.  This is one of the reasons they’re asking you to supply it rather than simply doing it themselves.  They have Google too. They don’t want the legal exposure and by asking you to it, they avoid the whole issue.


So why are appraisals higher than online prices?  Sometimes quite a bit more.


Deciding on the appropriate value is a bit tricky.  If you have a loss, they can’t just mail you a diamond from their vault and call it good, even if that’s exactly what you do when you buy.  People would never stand for that as a replacement procedure.  People want to see a store.  They want to talk to a human.  And those humans want to be paid.  How much they’re paid is a point of negotiation, but the cost to replace usually really is more than what the discount internet joints are charging.


The other problem is a tradition with retailers.  Stores like to list things as ‘worth’ more than they’re charging because it makes the store look good.  They’re your buddies and it’s all about the love. Tossing in a report with a high value conclusion on it doesn't cost very much and it makes customers feel good about the sale. As a side benefit, it keeps you out of the appraisers office where you might learn something that interferes with their sale. 


The bright side is that this can all be dealt with by hiring a real appraiser rather than using the report that came in the packing materials.  You’ll get a better description, you’ll get a more accurate replacement, you might learn something useful, and you’ll save money on your insurance (usually). 

Edited by denverappraiser
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Another benefit of a "proper" appraisal is that it typically will include more than the description of the diamond and the ring in purely neutral terms ("18 k white gold ring..."): it will (possibly separately from the "insurance" part of the appraisal) provide you with information on workmanship and finish of the whole object.

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Just came back from some traveling and am catchin up on threads.  As much as both Davide and Neil provide excellent answers, neither addressed your first question as to whether renter's insurance covers your new engagement ring.  The simple answer is yes but you should contact your insurance company and add a rider to your existing policy.  This basically highlights this specific asset as opposed to bunching it with household items.  If you are renting short term or moving fairly often, you might want to consider a separate policy from Jewelers Mutual or some other company that will cover individual pieces.  Most insurance companies require high value items to specifically itemized.  this would include jewelry, art, high-end equipment, etc...

Hope this helps,

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Thank you!   I contacted my homeowner's insurance, and simply added it as a "rider" as Laurent suggested.

David and Denver, thank you for explaining (exposing? hahaha) the insurance nut.  It's amazing to me how everyone, in a very light/indirect way, works against the very best interests of the consumers, the sole exception seems to be the independent appraiser hired and paid for by the consumer.  I'm in real estate and it's the same way; real estate agents are in bed with the inspectors, the title officers, the attorneys....


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