You've done your homework, decided on a quality diamond, shopped for the best price and now you're the proud owner of a diamond.Do you need to get diamond insurance? Your regular homeowner's insurance has specific loss limitations. If you've purchased an expensive diamond, the first thing you need to do when making a decision about whether or not you need specific additional insurance is to check with your homeowner's carrier and find out exactly what the policy will cover. Most policies will only cover a loss if it occurs in your home; for example, as a result of theft. In addition, there will be a limitation on the amount of coverage. For homeowner's policies, this is usually anywhere from $1,000 to $5,000; check your policy to see what the limits are on individual items. If you have a diamond that exceeds the maximum coverage, your homeowner's policy will not pay either the appraised value of the diamond, or the replacement cost.The additional insurance of any item, including an expensive piece of jewelry, is known in the insurance company as a rider. When you call your insurance agent, you will want to let them know that you are inquiring about a rider for your diamond jewelry.Whether or not you want to purchase additional insurance for your diamond depends on the actual value of the diamond. Smaller gemstones that are not highly valued are probably not good candidates for additional insurance; the annual policy premiums will quickly exceed the value of the diamond. Antique jewelry is also a good candidate for coverage, due to the fact that it is difficult or impossible to replace.However, if you've purchased a high-quality, expensive diamond that is going to be worn frequently, it might be a good idea to ask your insurance carrier about additional coverage for it. If you do, there are some questions you will want to ask:
Is an appraisal required? If so, does the appraisal have to be from a source specified by the insurer?
Is a certified required for the diamond? Some insurers require that the diamond be certified by GIA or similar agency before it can be insured.
What type of loss does the policy insure? Does it cover loss at any location? Does it cover loss if the diamond jewelry being insured is in the possession of another party, such as a jeweler, or on loan to someone else?
Does the policy cover full replacement cost? And if so, does the item have to be replaced, or is there an option for cash settlement? Does the replacement have to be purchased from a specific vendor approved by the insurance carrier?
Does the policy cover repairs in the event of damage?
How much will diamond insurance cost? As with most insurance policies, diamond insurance premiums depend on both the value of the diamond and the amount of the deductible. Your premiums will be lower if you select a higher deductible, but that will mean you have more out-of-pocket expense if you choose to replace a diamond that is lost or stolen. There are some policies that have no deductible.The cost will also be determined on what type of insurance you buy. There are three types available: actual cash value, replacement value and agreed value (the value you and the insurance company agree on as the value of the diamond).You can expect the insurance company to calculate the premium on the basis of the amount being insured. If you can't afford insurance for the full appraised value of the diamond, then consider insuring it for less. If you've decided the diamond is worth insuring at all, insuring for less is better than not insuring it at all.Due to the number of factors involved that impact the price of insuring a piece of diamond jewelry, it's impossible to say how much the insurance will ultimately cost.If you have loose stones; i.e., stones that are not in a jewelry setting, it is more difficult to obtain insurance. If that's the type of diamond insurance you're obtaining, you need to let the insurance carrier know that the stones are not set.It doesn't cost to shop for diamond insurance, so talk to your insurance agent and get coverage options and pricing, then make your decision.
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