[Poll] How much insurance do you have on your e-ring?

[LittleRiver]

FI bought my engagement diamond last year just before the last major price increase. By the time the ring was on my finger, it would have cost about 20% more than FI paid to replace it. The vendor provided an appraisal value about 38% above that replacement cost. Given the crazy price increases we had seen while shopping for my e-ring, we went ahead and insured for the appraisal value.

Now, prices seem to have stabilized (and platinum is actually lower than last year), and it seems excessive to pay premiums on a figure 38% more than what it would cost to replace the ring today. But I'm having a hard time deciding what the right amount of coverage is. Should we insure for 10%, 20%, 30% more than what it would cost to replace today?

WWPSD?

 

[madelise]

Those jewelry store appraisals aren't worth the paper they're written on. The insurance companies will only insure up to the actual value of the item. If it's inflated, you're only doing yourself damage by needing to pay an excess amount of % for the premium.

I haven't yet started my insurance because my ring is not in my possession, but I did bring it to an independent appraiser. He explained that he will only mark it to reflect up to 5 years' worth of inflation, because anything more would be a disservice to me. I believe some insurance companies automatically will increase the coverage over time to reflect inflation, but I'm not 100% sure on that yet. Either way, DON'T over insure! You're wasting your $!

ETA -- if you have a high ticket item, get it appraised by an independent appraiser. That way the insurance company has DETAILS of what you're insuring, from an appraiser that is not related to the jewelry store. If it's not super high ticket, you can just use your receipt as the proof of value. I have heard from two appraisers now that the insurance companies basically blow off the jewelry store appraisals because jewelry stores will obviously make their own items seem more costly than what they really are. If your stone isn't GIA or AGS graded, please get an actual appraisal done! That way, if all crapola hits the fan, you still get a replacement for what you really have, and not just what the insurance companies think you had.

 

[diamondseeker2006]

Look for how much a similar stone and setting cost and you'll always know what the true replacement cost is. I try to always insure with the sales receipt when I can because it makes no sense to overinsure because the insurance company is not going to pay out more than the item is worth. I'd work with your vendor to get a realistic valuation for insurance. I don't have a problem with a 10% cushion just so you don't have to get an appraisal very often, but more than that is (your) money down the drain!

 

[LittleRiver]

Those jewelry store appraisals aren't worth the paper they're written on. The insurance companies will only insure up to the actual value of the item. If it's inflated, you're only doing yourself damage by needing to pay an excess amount of % for the premium.

I haven't yet started my insurance because my ring is not in my possession, but I did bring it to an independent appraiser. He explained that he will only mark it to reflect up to 5 years' worth of inflation, because anything more would be a disservice to me. I believe some insurance companies automatically will increase the coverage over time to reflect inflation, but I'm not 100% sure on that yet. Either way, DON'T over insure! You're wasting your $!

ETA -- if you have a high ticket item, get it appraised by an independent appraiser. That way the insurance company has DETAILS of what you're insuring, from an appraiser that is not related to the jewelry store. If it's not super high ticket, you can just use your receipt as the proof of value. I have heard from two appraisers now that the insurance companies basically blow off the jewelry store appraisals because jewelry stores will obviously make their own items seem more costly than what they really are. If your stone isn't GIA or AGS graded, please get an actual appraisal done! That way, if all crapola hits the fan, you still get a replacement for what you really have, and not just what the insurance companies think you had.

I guess that is really my question--what % of padding do I need to protect against inflation and future price increases?

The appraisal is from a PS vendor and includes the GIA certificate, ASET, Sarin, etc. I think it is more than 10 pages long! So no worries there.

 

[LittleRiver]

Look for how much a similar stone and setting cost and you'll always know what the true replacement cost is. I try to always insure with the sales receipt when I can because it makes no sense to overinsure because the insurance company is not going to pay out more than the item is worth. I'd work with your vendor to get a realistic valuation for insurance. I don't have a problem with a 10% cushion just so you don't have to get an appraisal very often, but more than that is (your) money down the drain!

I don't want to use the sales receipt because the ring was purchased just before the last round of price hikes and would cost 20% more today. Do you feel like a 10% cushion is enough to protect against future price increases? The ring is from a PS vendor who is willing to work with me, but I need to decide what valuation I am comfortable with.

 

[janlwf]

I wanted to insure with Jewelry Mutual - Perfect Circle and needed an independent appraisal. I brought all my documentation, GIA report, sales receipt, vendor appraisal and told him that I didn't want to pay insurance fees for twice my purchase price so I expected an appraisal closer to my purchase price. Didn't matter, apparently he had to follow his profession's guidelines. And after all that, my appraisal does not even list GIA XXX cut, only its I colour and SI1 clarity...Its hard not to feel ripped off

 

[kenny]

None.

You forgot to include that option.

 

[LittleRiver]

None.

You forgot to include that option.

Insurance is a must for me because, if something happened to my ring, we wouldn't spend the money again to replace it. We just have too many other things to save for with a wedding (and hopefully house and children not too far off). But I would be devastated to be without my ring.

 

[Laila619]

Probably about what it would cost to replace today. Actually, I guess it's less now since I never updated my policy when I reset to a 3 stone ring, so the new setting and two side stones technically aren't covered.

 

[Dreamer_D]

Mine is appraised for a generous estimate of current retail replacement, which was hard to determine anyways since my ring is from the 1920s and true comps are hard to find. I bought on the secondary market though, for much less than retaul value. Not sure how I would replace it if it was lost, likely with something different but equally cool on the secondary market. My ring is an antique so an identical "like kind and quality" replacement is likely impossible anyways.

When I owned an MRB I insured with a buffer so I did not have to worry about fluctuations. I think the buffer was about 30% over internet pricing, similar to retail locally to me. My premiums were low, I did not worry about it. Insurance is for peace of mind, and the buffer gave me that -- with no buffer, an ill-timed increase in diamond prices could mean not being able to replace my ring! I also always choose a $500 to $1000 deductible which lower premiums a tonne because it means I won't be make a million silly little claims for damage to setting etc.

 

[Dreamer_D]

Probably about what it would cost to replace today. Actually, I guess it's less now since I never updated my policy when I reset to a 3 stone ring, so the new setting and two side stones technically aren't covered.

Laila your center stone probably is not covered either since insurance coveres a ring, not a diamond. If you had a loss you would have to claim the original ring was lost. If your diamond chipped you might not be covered at all since it would obviously be in a different setting. So you are probably paying premiums for nothing right now!

 

[kenny]

None.

You forgot to include that option.

Insurance is a must for me because, if something happened to my ring, we wouldn't spend the money again to replace it. We just have too many other things to save for with a wedding (and hopefully house and children not too far off). But I would be devastated to be without my ring.

No problem.
People vary.

You and I are both perfect.
One way rarely works for everyone.

I'm an old man who has almost always avoided buying optional insurance or extended warranties.
The money I've saved over a lifetime really adds up.

All that money gives me the peace of mind that people say they get from insurance.
People just vary.

 

[Dancing Fire]

none,i couldn't afford the insurance.

 

[emcee]

I don't have my e-ring yet, but I would love to see you add an option in the poll for "no insurance," just to see what % of people go with or without.

 

[Laila619]

Probably about what it would cost to replace today. Actually, I guess it's less now since I never updated my policy when I reset to a 3 stone ring, so the new setting and two side stones technically aren't covered.

Laila your center stone probably is not covered either since insurance coveres a ring, not a diamond. If you had a loss you would have to claim the original ring was lost. If your diamond chipped you might not be covered at all since it would obviously be in a different setting. So you are probably paying premiums for nothing right now!

Argh, really?! I should just cancel it then.

My ins company will make me get an appraisal (they won't just accept the receipt showing what I paid for the side stones and the new setting), and I really don't feel like paying for one...I'm too cheap. Plus my premium will probably go up a ton. It's already pricey as it is, considering I don't wear my ring all that much.

 

[Dreamer_D]

Laila lots of people self-insure -- meaning you just accept that if its lost you would have to pay to replace it yourself, or not replace it. No biggie. But surely don't pay for useless insurance!

 

[motownmama]

I've had my ER and tennis bracelet scheduled with Chubb, the former for 18 years and the latter for 8 - I should add it up and probably self insure...........

 

[Dreamer_D]

My premium is $150 per year. I would need to insure it for 100 years for insurance to cost more than replacing my ring

 

[NoOTforIT]

Look for how much a similar stone and setting cost and you'll always know what the true replacement cost is. I try to always insure with the sales receipt when I can because it makes no sense to overinsure because the insurance company is not going to pay out more than the item is worth. I'd work with your vendor to get a realistic valuation for insurance. I don't have a problem with a 10% cushion just so you don't have to get an appraisal very often, but more than that is (your) money down the drain!

The appraisal that came with my ring was definitely overinflated. (45% over what I paid. ) Unfortunately, good appraisers don't work cheap. I sat down and did the math and the cost of a fair and accurate appraisal from someone on the PS list will cost as much as 5-10 years of the premium savings the accurate appraisal would be worth. Not to mention I'd probably have to have it appraised once or twice more over that period to avoid getting caught under-insured. For my ring at least, I think I might actually save money staying overinsured until inflation catches up to the jeweler's appraisal rather than trying to lower my premiums by keeping the ring accurately appraised.

 

[0-0-0]

I don't think it makes sense to over insure at any time. I try to insure to replacement cost and defer new appraisals as long as possible. I see any under insured amount as a deductible I write myself.

If annual insurance is over 5% of replacement value I would probably self insure. But in my location annual insurance is usually under 2% of replacement value so I see no reason to self insure.

 

[LittleRiver]

I don't have my e-ring yet, but I would love to see you add an option in the poll for "no insurance," just to see what % of people go with or without.

Yes, I would like to see that % too. But I think it's too late to edit the poll. Interesting that it did not even occur to me to add that option!

 

[LittleRiver]

If annual insurance is over 5% of replacement value I would probably self insure. But in my location annual insurance is usually under 2% of replacement value so I see no reason to self insure.

Interesting. My current premium is about 3% of replacement value. If I decrease the coverage to current replacement value the premium drops to 2% of replacement value. That means I'll pay for the ring again in 50 years!

Dreamer_D it sounds like you are paying 1%, which seems much more reasonable. I already have a $500 deductible.

 

[MissStepcut]

I used an independent appraiser that both Brian Gavin and my insurance company recommended, who valued my ring at over double what I paid for it on the secondary market, so that's the point it's insured for. I talked to my insurance agent about it, and he said adjusting down the value closer to what James Allen comps were priced at right then was only going to save me a negligible amount on premiums, so we just pay the premium on the fairly high appraisal.

Since my diamond was a BG re-cut bought on the secondary market, I have no idea what would happen if I lost it. Would they replace it with another BG re-cut? Probably not.

 

[lknvrb4]

Mine is about 50% more. I argued with the insurance company about using an agreed upon price instead of the appraisal and they told me that if I would go buy this ring in a brich and mortar store that is what I would pay. I explained I would not replace with a brick and mortar store, that it would be done online and they would not budge.

 

[rubybeth]

I probably have my rather inexpensive engagement ring over-insured, but that is primarily because JM has a minimum policy price of $25/year.

 

[NovemberBride]

Little River, I recently tried to reduce the coverage on my engagemetn ring and Chubb would not reduce the value beneath the appraised amount unless I had a new appraisal. So you may want to see if your insurer will let you choose a coverage amount that is less than your appraisal since apparently that is not permitted by some insurers.

 

[denverappraiser]

The typical insurance policy is agreeing to replace the item with another of ‘like kind and quality’ in the case of a covered loss. They vary a little bit both in terms of what constitutes like kind and quality and exactly how they go about doing the replacement but they are NOT agreeing to write you a check for the appraiser’s value conclusion. In most cases they have a list of jewelers they work with where they’ve agreed in advance to a discount sort of program so they don’t have to pay attention to coupons and the like. When you file a claim they’ll take the description from your appraisal, show it to one or more of their preferred vendors and go with whoever is cheapest. For some the list is big and for some it’s very short. Around here, State Farm is the big dog insurance carrier and they include nearly every jeweler in town. A few, like USAA, will use their own employees to make you a new ring and they own a jewelry store in Texas somewhere for this purpose; a few, like Chubb, will simply write you a check; and a few, like Jewelers Mutual, will ask you what jeweler you would like to use and then they will go try and make a deal with them directly.

In every one of these cases, if you’ve got a declared value that’s greater than the actual cost to replace, you will have ‘wasted’ insurance dollars. They’ll pay whatever they must to do the replacement and the extra benefit goes to them. I put wasted in quotes there because you are trying to predict the future here and that’s a mixed bag. If prices drop, nearly everyone will end up overinsured and if prices go up faster than expected, some will end up underinsured. Although I agree in concept with your appraiser’s statement that you want to build in 5 years worth of inflation coverage, the reality is that this is impossible to reasonably predict what this will be and this part is basically just a guess. As the investment people say, past performance does not guarantee future results. For insurance clients, I will normally have about a 25-30% fudge factor for this.

It’s worth noting that with every one of these, the description on your appraisal is at least as important as the price. It’s going to be used as the purchase order for the replacement should the need require. It should contain all of the necessary details, photographs to document those details etc. Many, I dare say most, jewelry store appraisals don’t do this.

NovemberBride. Talk to your appraiser about this. The insurance company is not claiming to be an expert in what it will cost to replace a piece of jewelry and they're right to duck this question. On the other hand, this is EXACTLY what they appraiser is claiming expertise in. I don't know if they charge for this sort of updates, some do and some don't (I do), but they should be happy to discuss it with you.

 

[bgray]

my ring is insured for what we paid. if i insured for the appraised value i would be paying in premiums the difference i will pay to get to the current replacement cost.

 

[madelise]

Thanks for your expert advise, Neil! Is that ~30% what you recommend, then? Do you suggest that we stay active in watching diamond prices, to update our appraisals and insurance as needed?

 

[Dreamer_D]

If annual insurance is over 5% of replacement value I would probably self insure. But in my location annual insurance is usually under 2% of replacement value so I see no reason to self insure.

Interesting. My current premium is about 3% of replacement value. If I decrease the coverage to current replacement value the premium drops to 2% of replacement value. That means I'll pay for the ring again in 50 years!

Dreamer_D it sounds like you are paying 1%, which seems much more reasonable. I already have a $500 deductible.

The percent you pay is likely related to the value of your policy with higher value policies costing a lower percentage.

I just double checked and I pay 1.1% for insurance. My premium was a little higher than I thought.