Please note: We are a gemmological laboratory. We do not sell jewellery
insurance. See the Services page for
the services we provide.
We hear the same complaint (and its variations)
over and over again. It comes usually in two forms.
Complaint One: "I have been paying a premium to my insurance company
for years now on my diamond ring which is appraised for $10,000.00. I
have lost the ring and the insurance company will only give me $4,500.00
in cash. They're cheating me!"
Complaint Two: "I don't want to pay so much insurance. Can you appraise
my jewellery for wholesale?"
On the surface, the concept of jewellery insurance is simple. You buy piece
of jewellery, let's say a diamond engagement ring, for $5,000.00. You, the
buyer, receive an appraisal from the seller for that amount indicating that in a
fine jewellery store, that ring can be replaced for $5,000.00. You then submit
that appraisal to your insurance agent who charges you a fee based on that
$5,000.00 value to cover you in the event that the ring is lost, stolen or
damaged. Let's say that the ring is stolen. You go to your agent and say "I
want another ring just like the first one". "No problem" says the
agent, "go to your jeweller, get them to make you another one just as
described in the appraisal and have them send us the bill". But things are
rarely that simple.
First, a whole industry has grown up around the very
big business of insurance replacements. It is a highly competitive and lucrative
market. In the event of loss, you will probably not be allowed to go "just
anywhere" (meaning a jeweller of your choice) to have your ring replaced.
You will be told to go to a firm chosen for you by your agent or insurance
company; but unless there is a clause in your insurance policy indicating that
you have to replace at the jeweller of their choice, you really do have the
choice of jewellers, with the understanding that your insurer will almost always
simply opt for the jeweller who offers the lowest price to them.
If you insist on going to your own jeweller eventually you will be allowed
to, but there are a few things you have to understand first.
1. In your
lifetime you may buy one diamond ring, or two, or four or six. Your insurance
company buys hundreds every month. They expect, and receive, volume discounts
from their suppliers for the items they buy.
2. Your premium of $2.00 per
hundred or $3.00 per hundred is calculated on the assumption that your insurance
company will pay much less to replace that ring than you will (because of their
volume buying power).
3. If you want cash, to buy the item again from your
own jeweller, it is unlikely that you will receive anything close to $5,000.00.
You are not being cheated in this case. It simply does not make sense for your
insurance company to give you more in cash than they would have to pay to
replace your ring.
4. However, if you want another ring that would cost
you $5,000.00 to buy, they will have it made up for you, using their volume
5. It is possible that in order to do more business with
your insurance company, your jeweller may choose to replace your ring for the
price the insurance company is prepared to pay. Let your jeweller discuss it
with your agent.
To sum up. If you do go to a replacement jeweller of your
insurance company's choosing, make sure, before you sign the release form, that
you insist on being able to take the new item to have the grading and value
assessed by an independent jewellery appraiser, to ensure that what you are
getting is the same quality as the item you had. Of course your insurer will
usually not pay for this service. It's up to you to check it out, but if you
find that the replaced item is not what you had before, you can get the matter
corrected before it is too late (ie: before the realease is signed).
Let's go back to complaint two: "Appraise my jewellery for wholesale. I
don't want to pay so much insurance". OK, so your item might be appraised
for $10,000.00 and you've got a cousin in the business. Why should you pay
premiums based on retail? Well, for one thing, the point of insurance is to be
covered in the event of loss (see above). Your cousin may be a fine fellow but
not necessarily a) a jeweller who can replace items like yours, or b) even in
the business when your ring is lost. Are you willing to take that chance? If so,
why buy insurance at all? You are going to be the first person to scream to high
heaven if your jewellery cannot be replaced for the amount of your coverage, and
you are going to be the only one you can blame. Peace of mind does not cost that
Questions To Ask Your Insurance Agent
Before you call up the agent who insures your home or your car and simply
have your jewellery covered, there are some questions you should ask. Jewellery
insurance is a specialized field. If you don't like the answers go elsewhere,
shop around until you get the answers you want; but be prepared to pay for
service. Remember, insurance is a product that you buy with your hard-earned
money. You should be happy with what you buy. Listed below are some questions
that you might ask an insurance agent. Use some or all, as the need arises, but
do read through them. Check out the Chubb Canada web site for more information.
The questions below are selected and reprinted from the American Gem Society
handbook of appraising.
- Is an appraisal necessary for full coverage?
- What is the difference between scheduled and unscheduled coverage?
- Is there a deductible? If so, how much? Do I have the option to increase
the deductible and thus lower the premium?
- Is my policy all-risk (partial loss, damage, mysterious disappearance,
- Am I still covered if there is negligence or carelessness involved?
- Is the item covered if lost, stolen or damaged while in the possession of
someone else? What if only a part is lost, stolen or damaged while in the
possession of someone else?
- If there is a loss, do I have a choice of a full cash-out or will I have to
- Can I go to whomever I wish for the full replacement?
- If a loss has been replaced through an insurance company source, will I be
allowed to verify proper replacement by an independent firm or accredited
- How much will it cost per thousand for full coverage? Partial? What do I
sacrifice for the limitations?
- Is depreciation ever imposed? To what and how is it computed?
- How often should I have an appraisal update?
- Am I limited to the appraised replacement cost should there be a sizable
increase in the value?
- If there is damage to a piece, can I replace it or will I be limited to
- What if the lost item is irreplaceable, like an antique?
- Are there any security precautions required? If not, would there be a
premium savings if special precautions were taken, e.g., the items were kept in
a home safe or in a safety deposit box when not being worn?
- What proof is needed to justify a claim?
- Are there different kinds of jewellery insurance available?
- Are there any exclusions?
- What is the pair and set clause? Will the insurance cover an additional
amount for matching a missing item in a set if it hasn't been computed and
- What types of property are not covered?
- Will you show me the actual language in the policy which addresses each
concern I've expressed?
© 1986 by American Gem Society