Reviewed by Rena Novotny
Updated September 11, 2023
Do you know if your home insurance policy covers your jewellery or watches? Home insurance customers often ask us why our online quoting system asks them to choose a limit of coverage for jewellery, because they think other insurance policies automatically include coverage for jewellery.
This is a dangerous assumption; in reality, most policies severely restrict the amount that will be paid in the event of loss or damage to jewellery and watches.
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Most home insurance policies will show a limit of coverage for your personal property, or for “contents” coverage on condo or tenant insurance policies. This section of the policy covers your personal effects, which often includes items like jewellery and watches. However, you need to look at the actual policy wording in order to understand the actual extent of coverage. With most home insurance providers, coverage for jewellery will be capped at a maximum of $6,000 or less per claim. This can be a significant problem, especially for customers who have purchased or accumulated a number of valuable pieces over time.
For example: under many home insurance policies, a person with $20,000 of jewellery and watches will receive only $6,000 in the event that all of their items are stolen – that person would lose $14,000 of value. Furthermore, customers who do not actually own any jewellery or watches still pay a premium that includes coverage for this kind of property – even though they might never need to claim for it.
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Here at Square One, we’ve taken a different approach. Our comprehensive home, condo and tenant policies do not automatically include coverage for jewellery; this way, customers who don’t need or want to insure these items can choose not to, reducing the amount of their policy’s premium. Customers who do wish to insure jewellery can then add on exactly the amount of coverage they need, for a premium based exactly on their amount of coverage.
Your first step will probably be to file a claim. What happens after that will depend on the type of coverage you have purchased, and what you choose to do: will you replace the item, or accept a cash payment instead?
Most modern policies provide insurance on a replacement cost basis, which is intended to replace lost or damaged property with new items of like kind and quality. For example: if your ring is stolen, your policy’s default approach will be to help you replace it with a new ring of like kind and quality, up to the limit of insurance that you have purchased. If you decide not to replace a covered item of jewellery, payment will usually be made on an “actual cash value” basis. This means that depreciation will be applied, so the payment you receive might be less than if you had actually replaced the ring with a new item of like kind and quality.
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Many customers have difficulty deciding how much coverage will be enough to replace all of their jewellery in the event of a significant loss. This becomes especially difficult when you inherit jewellery, or receive it as a gift – how can you choose a limit of coverage when you didn’t buy the item?
Our first and best recommendation is that you obtain an appraisal of your jewellery items. Many jewellers and retailers offer appraisal services for a moderate fee; in exchange, they will carefully examine your jewellery and provide you with a detailed report describing it, with magnified photographs, and an approximate “current replacement cost” estimate. This estimate, plus applicable sales taxes in your home region, tells you how much insurance you should purchase in order to ensure that you have enough coverage to replace the item in the event of a loss.
As global markets remain relatively volatile, the cost of precious metals and stones continues to fluctuate. To make sure that your coverage remains adequate, we recommend that you revisit your appraisals at least once every three years; in many cases, you can ask the original appraiser to provide you with an opinion as to whether or not your specific item will have changed substantially in value and if you should go to the trouble of a complete re-appraisal.
One further advantage of having an appraisal is that it will help you out if you need to make a claim for loss or damage to jewellery items. Instead of trying to work backward, hunting for old photos and scouring your memories in order to attempt to describe the item and negotiate a settlement, you and your adjuster can use that appraisal as an exact description of the item involved in the claim. This can significantly accelerate the process of sourcing or designing a replacement item that matches your original item.
Remember that most policies are designed to provide “replacement cost” coverage – but the most they will pay is the limit of coverage that you have purchased. Your policy probably won’t pay more than the limit of coverage that you purchase. Jewellery sales and discounts don’t last forever; if the limit of coverage you choose is based upon a discounted price, and that discount is no longer available when a claim occurs, you will be on your own to pay out-of-pocket to make up the difference. Your insurance provider most likely has no obligation to make up the difference if you choose to buy less coverage than you actually need to replace an item.
Want to learn more? Visit our Home Insurance Basics resource centre for dozens of helpful articles to guide you through the ins and outs of home insurance. Or, get an online quote in under 5 minutes and find out how affordable personalized home insurance can be.
About the expert: Rena Novotny
Rena's 23-year career started as an independent adjuster where she specialized in complex property, liability and special risk loss. As a branch manager, Rena hired, trained, mentored and coached several adjusters. She continues part-time post-graduate studies in neuro-psychology and traumatization, learning how both may impact the insured's engagement on catastrophic claims. Rena has a MA (Conflict Analysis and Management), CRM, CIP, and holds a level 3 adjusting license.
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