Insurance (don’t yawn on us!) is something that has affected people and their families for such a long time. Whether or not it’s the people in ancient societies of Rome, or a newly engaged couple in the United States, the truth connecting us all is that we are, and always have been, afraid of bad luck. It is hardwired into our brains to be risk averse and to make decisions accordingly. This is why people, groups of people, families, and businesses have been benefiting from insurance for thousands of years. The first insurance buyers didn’t love paying for their peace of mind any less than we do today (but they still paid into it).
In a perfect world where risk is always low and insurance is cheap, we all would be adequately covered, but because this is not the case, we’re left to make a judgment over buying or not buying.
Money is tight, and if you or your partner just made the (perhaps) biggest purchase to-date in life, then you or they probably don’t have a lot of spare cash — so it would be a devastating mess to have your ring stolen, lost, or damaged. Yikes!
Getting engaged can be complex in general, with all of the new and moving parts to formalizing your future. It’s a good idea to always make informed decisions, especially when it comes to insurance.
There is some protection against the loss of an engagement ring through homeowners insurance, but it is usually situational. Some policies cover the loss of jewelry through theft, fire, flood, or another unplanned disaster. Some policies only cover parts of lost jewelry, meaning, your engagement ring may not be fully covered in the event of damage, theft, or loss.
The best first step is to check with your homeowners insurance provider on their jewelry policy. Don't forget to ask how much the policy covers! Although some policies may cover some parts of lost or damaged jewelry, it may not be enough to cover the whole cost of your engagement ring.
The only way to make sure that your ring is fully covered no matter the incident is to invest in insurance for your engagement ring. You might be thanking yourself in the long run in the case of an incident and knowing that you're covered no matter what can also help give you peace of mind in any event that may put your ring in danger.
The rates of engagement ring insurance can actually depend on where you live. If you live in an area with a higher theft risk, you can expect to pay a little more than a person who lives in an area with low theft rates.
Generally, the insurance cost for an engagement ring will be about 1-2% of the value of the ring per year. But, be sure to get an appraisal done on your ring so that you know the value before getting it insured.
The purchaser of the ring should ask the jeweler if they’re comfortable securing the ring in their store until the proposal happens and insurance is placed. Sometimes the preparation before the proposal process takes some time! Chances are, the ring is in a safer status in their store than uninsured in your apartment or house. Jewelers, for obvious reasons, go through sufficient lengths to secure their inventory. While your ring post-sale is your asset not theirs, it may still be a better idea to entrust a business with the ring’s security, unless you want to take possession and get the insurance going right away.
You can’t insure any physical asset without first knowing its replacement value. If you’ve acquired a family heirloom, this step may not make sense, as your family members are the only people that can have an opinion on its intrinsic worth. If your ring was purchased, an appraisal is recommended, if not necessary, in order for the insurance company to formulate a limit of coverage and premium. It may not be required if the receipt is less than $5,000. The path of least resistance is to let your jeweler do the appraisal for you, but this isn’t a logical idea. Is your jeweler an advocate for you? — for sure, however, a conflict of interest exists. Retailers will have no self-interest in appraising your ring for less than the amount for which they sold it — otherwise, they’re admitting markup. They may (likely) appraise the ring at, or above the amount you paid, which supports their sale price. The diligent approach is to have an unbiased third party review your ring without knowing what you paid for it, or from whom you bought it. Look online using some key search words: “gemologist appraiser” — “jewelry appraisal” — “certified gem appraiser,” to locate a few options. Comb through their reviews and call to get quotes — fees should range from $50 to $100 per ring. Hypothetical plot: a jeweler sells you a ring for $15,000, and it’s estimated to cost the jeweler about $10,000 to replace the ring (information not privy to you). The jeweler appraises the ring at an estimated $18,000 replacement cost and you give that to insurance. The insurance company sets the premium you pay, according to $18,000, although it really does not cost anywhere near that much to replace. You, in the long run, continue to pay premiums assuming an $18,000 value. If you end up losing the ring, the insurance company contacts the jeweler to negotiate the ring replacement and the jeweler profits a considerable margin for this incident. Alternatively, you want the third party appraisal firm to do this work, not the jeweler, and arrive at a replacement cost, formulated mathematically. It will never be a perfect appraisal, as the process is imperfect, like most things. However, you eliminate bias while gaining solace in the fact that you not only have sufficient insurance limits in place, but you are not overpaying for it!
Here is some math to help you get started. Take the total appraised replacement value of the ring and multiply it by 2%. Next, multiply it again by 3%. For example, a $15,000 ring multiplied by 2 – 3% = $300 – $450. Your annual premium will likely fall within the 2 – 3% of that replacement cost window. This is no more than a guideline, as premiums are affected by underwriting modifiers that are specific to your situation (home security, location risk, etc.). Talk with your partner about the 2 – 3% price range and if this is something palatable for you right now. It would take you about 40 years of paying the same premium to fully eclipse the value of your ring in total payments (ugh, paying for the ring twice?). Some people have a hard time coming to terms the premium “look back." It’s important to view insurance more tangibly. E.g. Think as if once per month, you pay $25 – $38 to make sure you can keep your $15,000 ring — not that keeping it comes free. After all, this boils down to about $1 per day in this example, or a third of your morning coffee.
If you buy homeowners or renters insurance already, start there. Some policies already have some built-in coverage for “unscheduled jewelry” ranging from $1,500 – $2,500. Other policies don’t have this — but even if they do, it may not help you if the insurance company is unaware you even have (or had) the ring. Your ring will likely need to be “scheduled” onto the policy at a higher, specified limit based upon the appraisal document. It is unlikely nowadays that your renters or homeowners insurance carrier cannot offer this coverage. What if you and your fiancé(e) don't live together? Look to endorse the existing policy that is issued to the recipient of the ring. The ring needs to be insured by the person wearing it (who is creating the exposure to loss). A legal question unable to be answered is whether or not the proposer or the proposee actually “owns” the ring during the engagement period. Loosely speaking, courts have decided that a broken engagement is an unmet condition to a conditional gift — the condition being the legal marriage event. Therefore, the ring probably belongs to the proposer, until the marriage has taken place (the condition is met). This is of course, not a black and white answer, but a noteworthy mention. A possible caveat is if the proposee can say that the gifting was not conditional, but rather, a regular gift, gifted over a holiday such as Christmas or Valentine’s Day. It’s important to be aware of life nuances even if you are in a perfectly healthy engagement with the right person!
Ask if there is coverage for “mysterious disappearances.” It’s not worth paying for coverage if it excludes lost items at your fault or with indeterminable fault or cause. Couples are ultra-careful with their valuables, but the truth is that when traveling outside familiar elements, routine is lost — and so may be the ring. Rings often get forgotten in hotel rooms and places outside the home. Some hotels and their management companies have Crime insurance, however, such coverage is usually not intended to cover valuable jewelry that is not first registered with the front desk (noted on record), and stored in a jewelry lock-box in the hotel room at the time of theft. Not all hotels have lock-boxes either, so don’t count on extra layers of protection from outside insurance sources. This goes without saying: Leave your ring at home when you travel, or if you must have it, wear it at all times!
Want to know more? Schedule a call with your insurance agent to get detailed guidance that meets your specific needs, as Molly My Magazine, its employees, officers, and contractors are not licensed insurance professionals, nor legally qualified to give absolute advice on related subjects.
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This article was originally published in the summer 2018 issue of Molly My Mag under the title “The Afterthought Of Being Engaged -Insurance” and has been included by our team here.
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