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--IS YOUR FAMILY JEWELRY PROTECTED?--
by John A. Christensen, G.G., N.J.A., Copyright © 1998, All Rights Reserved.

I have experienced a lot of confusion, and misconception, about how well personal jewelry items are covered under renter's and home owners insurance. When insuring these items, there are some very important considerations to take into account. Not every piece needs to have a formal appraisal, but there are as many different policy limitations and variations as there are rings. I am not your insurance agent, and only your agent will know the limitations of your policy. Agents are generally very good about explaining coverage in detail, if you ask the right questions. I will attempt to give you some information in this article that will help you feel more at ease with your coverage.

---Replacement Value---

The replacement value assigned to a piece of personal property is generally the value that will replace the article in the regional geographical area that you live in. For custom or handmade pieces, the value would be what it would cost to be made at an establishment where a goldsmith/silversmith hand crafts the piece. Prices for these services can vary a great deal.

Here is an example of retail market value: If you buy a piece listed in a mail order or department store catalog for $600.00, it's available at that price through the catalog all year for this price, often there is a "compare at $900.00" line at the end. The replacement value of that Item is $600.00, not the higher price. This can be bought at this price any time. Sometimes, if the insurance company has a dialogue with a store, you may be able to get an even better price. Having an arrangement between a store and insurance company helps to lower costs for insurance rates. You should encourage the insurance company to help you find a replacement if you have a loss, it will help all consumers in the long run.

The Appraisal price of a piece is not double the purchase price. This was an industry practice for quite some time. It was used by uninformed jewelers to make sure that you were covered (at your expense in insurance premiums), and possibly to make you feel better about your purchase. Unless you bought your piece at a truly discounted price, this would not be accurate, and I would encourage another opinion. Even buying pieces at 40-60% off doesn't always mean good value, and you shouldn't rely on the full price to calculate insurance coverage. I once repaired a bracelet that was purchased at 50% off, and my everyday asking price was nearly half of the "per gram" price that they paid, and the regional average was fully 40% less than what they paid. Don't be fooled by the sale prices, and don't pay more than $28-30 (the average) per gram. If they won't, or can't, tell you the price per gram, don't buy it.

A handmade, designer piece, often has a higher appraisal value than the purchase price, because of the nature of the piece, and the market fluctuation associated with designer names with respect to collectors. A good appraiser will do the research & account for these fluctuations in stating a replacement value. In some cases, there IS no replacement of such a piece, and you may have to accept a cash settlement.

---Scheduled vs. Blanket coverage---

Some very good examples of why you should schedule jewelry with your provider are the experiences of a couple customers of mine. One had a necklace with a diamond pendant that was only covered under the blanket policy. This is usually a stated maximum of $1200.00 to $1500.00, and the deductible usually applies (again, talk to your agent). She had a $500 deductible policy. One day, while loading groceries into her car, she caught her chain on the bag, and continued home without checking. When she got home, she noticed her chain hanging around her neck, broken, with no pendant. She returned to the store parking lot to find her pendant, run over, diamond out of the mounting but not damaged. The pendant was destroyed beyond repair. Because the item wasn't lost or stolen, there was no coverage. Even if it had been stolen, the insurance would only cover up to the maximum allowed LESS the deductible. If the Diamond was worth $2000 by itself, she would have only gotten $700 to $1000 for this claim.

Another customer had 7 rings, each valued at an average of $600. Her apartment was broken into, and everything but the ring she was wearing was taken. With a limit of $1200, and a $250 deductible, she had a net loss of $2650.00 that wasn't covered by insurance. Her thinking all along was that she didn't have anything over $600, and her insurance covered her for $1200. Again, check with your agent for your individual policy limits. In most cases, if you have your jewelry scheduled, it's going to be covered up to it's full stated value with no deducible.

---Your Appraisal Document---

Your appraisal should be detailed enough for a qualified jeweler to know exactly what is needed to replace the item. This includes estimated or actual weight of the stones, color and clarity, actual measured dimensions of the stones and the piece, type and fineness of metals used, overall weight of the piece, any finish or texture that identifies it, and any marks or stamps. You should always have a picture of the piece, either by the appraiser, or by you, that is a close enough view to note details of the piece. A view of the whole family from across the room with you and your 5 mm pendant is not enough. I digitize a close-up, and print it in color on the document, as well as keeping the picture file on computer disk in case the need arises.

Look for the qualifications of the person that signed the document. Do they have any degrees? Are they associated with any professional organizations? Have they completed a GIA course (Gemological Institute of America), such as the Diamonds course? They would then have "recipient of the Diamonds Certificate, (GIA)" after the name. Having taken Diamonds, Diamond Grading, and the appropriate extension course, they may be a "Diamonds Graduate, (GIA)". Gemologist, and Graduate Gemologist (G.G.) degrees encompass all areas of diamonds and colored gemstones, with the Graduate being the equivalent of a Masters degree in the field. Organizations such as A.G.S. (American Gem Society) also hold their members accountable, and require proper education. Has the appraiser personally signed the document? Don't settle for a rubber stamped signature or initials. Make the appraiser accountable for his work. If you get a department store appraisal, make sure that the person signing that appraisal was not sacking groceries 3 weeks before putting a value on your family heirloom.

Ask if the jewelry will be leaving the premises. Your neighborhood jeweler has long been recognized as the best one to do business with, and most of the time, the qualified person is in-house. Be prepared to leave your jewelry. Quality work takes time, and the best job will include a complete clean and high polish. On the spot appraisals rarely have enough research to be accurate or complete.

----Are you up to date?----

A general rule of thumb is that you should have your appraisals evaluated every 4 years to make sure you are covered at current market prices. The price of gold fluctuates every day. The price of diamonds over 1 ct. has increased from 20 to 30% in the last 3 years! People with diamonds in this size class should dig out your appraisal right now & get an opinion. I replaced a broken stone that was .75 ct. (3/4) recently. This customer had an appraisal from 1983, and was nearly $1000 short on the market value stated in his policy. He was lucky enough that the gold in the ring was worth enough, at the time of appraisal, that it allowed for some of the difference to be cancelled out. Don't take the chance that the value hasn't gone up, or that your appraisal may not have been done by a qualified appraiser.

  In closing, review key points of your insurance policy with your agent to see what the limitations are. Go over everything you have, no matter how trivial you think it is, and asses the need for documentation. In some cases, it isn't warranted, and that may be your call.

Trust is everything in the jewelry business. The most important thing is to work with a jeweler you have confidence in, and can return to. The media has had a field day, at times, zeroing in on some bad apples. Please don't assume your jeweler is going to switch stones. As a rule, it is a very trustworthy profession, and no jeweler likes another to be dishonest. It gives the whole industry a bad name, and it's the last thing any of us want to happen. Please don't ask your jeweler if they are going to switch stones on you. Again, go to someone you can trust. If you don't know anyone, ask your friends who they deal with, and who they feel is trustworthy.

John Christensen, G.G., had been in the jewelry trade in the Des Moines, IA area for 19 years. Now in the Chicago area.


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