Getting or giving some bling this time of year?  Your homeowners or renters insurance will cover this no-questions-asked, right?  Not so fast.  There are a few things you need to know about how your policy covers or doesn't cover jewelry and other valuables.

While you may have a pretty high limit of coverage for personal property (including valuables), you need to understand that this coverage on most homeowner policies is not as broad as it is for the home itself.  In most cases your personal property is covered only for the perils that are specifically listed in the policy.  The typical perils covered would be fire, lightning, hail or windstorm, explosion, smoke, vandalism, aircraft or vehicle collision, riot or civil commotion, sinkhole collapse, volcanic activity, burglary, falling objects, weight of snow and ice, freezing of plumbing, accidental water damage and artificially generate electricity.  While that may seem like a pretty "Broad" list, there are several perils not listed here that often cause loss for jewelry and valuables.  The most notable would be breakage and mysterious disappearance.  What if you just simply drop the item on a hard surface and it breaks?  Or you look down at your ring one day and the most valuable part of it, the stone, is gone.  You have no idea where it went; it's just gone.  Ever had one side of a set of earrings turn up missing?  On the typical homeowners policy you'd be out of luck in these situations.

Another major misconception is that the limit on your policy for personal property will cover any and all jewelry and valuables.  Wrong!  Homeowner policies include much smaller underlying limits for certain types of personal property, especially when it comes to the peril of theft.  So while your jewelry by be covered in its entirety if your house burns down, you may only have coverage for $1,000-$2,000 if your items are stolen.  A similar situation would apply to items such as cash, securities, guns, tools, antiques, silverware, cameras, musical instruments and business property.  Don't assume that you have adequate coverage for these types of items just because the Personal Property limit on your policy is a six-figure number.

Finally, the other thing you need to be concerned about is valuation.  Even if you have high enough limits for each type of personal property, you may not have the right coverage form.  Most homeowners and renters policies provide coverage for personal property on an Actual Cash Value basis, meaning that claims are settled subject to depreciation.  And even if your policy provides Replacement Cost coverage, that may not eliminate the problem.  Certain items such as antiques, collectibles and custom jewelry can be very difficult to place a value on at the time of a loss.  You can avoid a lot of headache and heartache by insuring these types of items on an agreed-value basis, where you and the insurance company agree on the value up front so that there is no question about the value if there is a claim.  This type of coverage can often be purchased by "scheduling" the items on a special type of rider or purchasing a separate Inland Marine policy.  Make sure you have a good agent that can explain the ins and outs of covering your valuables and can help you select the right coverage for your circumstance.  You may wish to download our Free ReportsWhat You Don't Know About Insurance Could Cost You Thousands and How to Select a Personal Insurance Agent... for more information.

Posted 12:00 AM

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