How to insure jewelry and other valuables

An engagement ring, a good watch, a camera kit, a set of golf clubs or a painting inherited from a grandparent all sit inside the contents coverage of a homeowners or renters policy, and all of them are covered worse than the sofa. Standard forms put a low sublimit on theft of jewellery and watches, on furs, on silverware, on firearms and on cash, and they cover contents only against the named perils in the form. The two most common ways jewellery is actually lost, a stone falling from a setting and a ring left on a hotel sink, are neither theft nor a named peril, and the base policy pays nothing for either.

The answer is to insure the item specifically, which the industry calls scheduling, or to buy a policy written for valuables alone. Both cost less than owners expect and both change the terms entirely: agreed or appraised value, no deductible, and coverage for accidental loss and mysterious disappearance anywhere in the world. The steps below cover the appraisal that makes it possible, the choice between the two routes, and the terms that decide what a claim actually pays.

What to gather first

The paperwork is the coverage; without it, scheduling cannot happen and a claim has nothing to stand on.

• The declarations page and the policy form, so you can find the sublimits and see whether contents are on replacement cost or actual cash value.
• A list of the items worth insuring individually, with a photograph of each and, for jewellery, a close-up of the setting and any inscription.
• Existing appraisals, grading reports for diamonds, sales receipts, certificates of authenticity for art and collectibles, and provenance letters for inherited pieces.
• Serial numbers for watches, cameras, instruments and firearms.
• The purchase date and price where known; for gifts and inheritances, an estimate and a note of where the item came from.
• Where each item is usually kept and how often it travels, since that affects both the premium and the coverage terms.

Step one: get an appraisal a carrier will accept

Scheduling requires a value, and the value comes from an appraisal. For jewellery, carriers want a written appraisal from a qualified independent appraiser or a jeweller with gemological credentials, describing the piece in detail: metal, weight, each stone's carat, cut, colour and clarity, the setting and the condition, with a replacement value. A retailer's receipt is accepted by some carriers for recent purchases up to a modest value, and rejected by others; a receipt from years ago is a purchase price, not a current value. Grading reports from a recognised laboratory strengthen the appraisal for diamonds and coloured stones but do not replace it, since a report describes the stone and not the finished piece.

Fine art, antiques and collectibles need an appraiser who specialises in the category, and the appraisal should state replacement value in the relevant market rather than auction estimate or insurance value from a decade ago. Cameras, instruments and sporting equipment can usually be scheduled from a receipt or a current retail listing for the same model, since they are manufactured goods with a known price. Firearms need make, model, serial number and a current value; a collection of any size is better on its own schedule than under the base policy's sublimit.

The appraisal should be recent. Carriers commonly accept one a few years old for scheduling but will pay the scheduled value on the appraisal whatever the item is worth on the day, so an old appraisal on a piece whose materials have risen in value is a quiet underinsurance.

Step two: choose between scheduling and a standalone policy

Scheduling adds a personal articles floater or a scheduled personal property endorsement to the homeowners or renters policy. Each item is listed with its appraised value and a small premium is charged per item. The advantages are simplicity, one carrier and one renewal, and a premium that is usually low. The disadvantages are that a claim on a scheduled item is a claim on the homeowners policy, which some carriers count at renewal, and that the homeowners carrier's terms for valuables may be less generous than a specialist's on matters such as cash settlement and pairs and sets.

A standalone jewellery or valuables policy is written by carriers that do nothing else. It sits apart from the homeowners policy, so a lost ring does not touch the home's claims record, and the terms are built for the category: replacement through the carrier's jeweller network or cash at the insured's option on many forms, automatic coverage for newly acquired items for a period, coverage for damage to a setting, and a preventive maintenance requirement that is explicit rather than implied. It suits a household with several significant pieces, with items that travel, or with a homeowners carrier that will not schedule above a certain value. For a single ring, the floater is often enough; for a jewellery box that is worth more than the car, the standalone policy is usually the better instrument.

Either way, ask whether the coverage is agreed value, which pays the scheduled figure on a total loss without argument, or replacement cost up to the scheduled figure, which pays what it costs the carrier to replace the item and can be less than the schedule if the carrier's jeweller can source it for less. Both are legitimate; they pay differently, and the premium reflects the difference.

Step three: read the terms that decide the claim

Scheduled coverage is typically all-risk: any cause of loss not excluded is covered, including mysterious disappearance, accidental loss and damage. The exclusions that remain are usually wear and tear, gradual deterioration, inherent vice, damage from repair or cleaning by the insured, and sometimes loss while an item is left unattended in a vehicle or checked in luggage. Read those. A stone that falls from a prong that had been worn thin for years may be argued as wear and tear; a stone that falls from a setting the jeweller checked last spring is an accident, which is one reason the maintenance receipt matters.

The pairs and sets clause decides what a lost earring pays. Some forms pay the value of the single item; others pay the difference between the set's value with and without the missing piece; the better forms let you surrender the remaining piece and receive the value of the pair. Check the territory, which for jewellery is normally worldwide, and the deductible, which for scheduled items is normally zero. Check whether the carrier restricts where items are kept when not worn, since a policy that requires a safe or a bank vault for pieces above a certain value is a condition, not a suggestion. Finally, check whether newly acquired items are covered automatically for a period after purchase, and for how long; a ring bought in Scottsdale on a Saturday and lost on the Sunday is either covered under that clause or not covered at all.

Step four: keep the schedule current

A schedule goes stale in two ways. Items are added to the household and never added to the policy: a wedding band joins the engagement ring, a watch is given at a retirement, a camera body is upgraded. And values move: precious metal prices, the price of a replacement stone, the market for a particular artist. Add new items within the automatic coverage window, and reappraise significant jewellery every few years or when the metal markets have moved noticeably. Some carriers apply an inflation adjustment to scheduled values at renewal; most do not, and the schedule says what it said the day it was written.

Ownership changes matter too. An engagement ring bought by one person and given to another belongs to the recipient once it is given, and should be scheduled on the recipient's policy, or on a joint policy once there is one. A student's watch and laptop at a college in another state are covered under a parent's policy only at the reduced away-from-home sublimit unless scheduled. Inherited pieces arrive with no receipt and need an appraisal before they are insured for anything above the sublimit.

Common mistakes

These are the reasons valuables claims are paid short or not at all.

• Assuming the homeowners policy covers the ring in full because the contents limit is large; the sublimit and the named perils govern.
• Scheduling from a retailer's receipt that the carrier will later reject, or from an appraisal old enough that the value is out of date.
• Not scheduling at all because the item was inherited and has no paperwork; an appraisal fixes that in an afternoon.
• Leaving the newly bought wedding band off the schedule while the engagement ring is on it.
• Buying replacement cost coverage and expecting a cash settlement at the scheduled figure.
• Missing a vault or safe condition on high-value pieces and keeping them in a bedroom drawer.
• Never having the settings checked, and handing the carrier a wear-and-tear argument when a stone is lost.

A worked example

Suppose a couple in Henderson has a renters policy with a $60,000 contents limit, a $1,500 theft sublimit on jewellery, and a $1,000 deductible. She has an engagement ring appraised at $9,000 and a watch her father left her, unappraised, that a jeweller values at $4,000. They schedule both on a personal articles floater with agreed value for an annual premium of around $180, with no deductible, worldwide territory and a pairs and sets clause that lets them surrender a remaining piece. On a trip to Park City the ring comes off in a pool and is not found. They report the loss, the carrier confirms the item on the schedule and the maintenance receipt from the previous year, and pays $9,000 without a deductible. Under the renters policy alone the loss would have been a mysterious disappearance, which the form does not cover, and even a theft would have paid $1,500 less the $1,000 deductible. The figures are hypothetical; the mechanism is exactly how it works.

How to use this

Send us photographs, whatever appraisals and receipts you hold and the declarations page, and we will tell you which items sit above a sublimit, whether the homeowners carrier or a specialist should schedule them, and what the loss settlement terms are on each option among the carriers we represent in Arizona, Nevada, Utah and Idaho. If nothing in the house exceeds the sublimits and the policy already covers contents at replacement cost, the recommendation is to schedule nothing and simply keep the photographs with the inventory.