Photo credit by jurvetson
Along with cars, homes, and electronics, diamond jewelry tends to be one of the most expensive purchases in many people’s lives. Because of this, it makes perfect sense that any valuable diamond could benefit from being insured. This insurance falls into three main categories, and like other insurance, many specific rules depend upon the place where the purchaser of the insurance lives.
The first type of diamond insurance, called actual cash value, is the most straightforward. This method of insuring a diamond replaces one that has been lost or damaged beyond repair no matter what it originally cost. Since it pays the current market value of the diamond rather than what the buyer had originally paid, many people take this type of insurance. However, be sure to check around with multiple insurers, as this method can be quite costly.
Many insurers recommend actual cash value insurance for an heirloom diamond, which in many cases appreciates in value over time and the original value of which may no longer be known. For those who can afford it, this method is also recommended for larger diamonds and more expensive jewelry to be sure the value is correct at replacement time.
Replacement value diamond insurance works like many other kinds of insurance and is therefore the most popular way to go. In this type in of insurance the buyer needs to beware, as he or she often does not get the full value of the lost or damaged diamond from the insurer. Legally, the insurer only needs to pay up to a certain amount determined to be the value of the diamond, and may not even pay the owner of the diamond the top value in the range. Oftentimes, they replace the diamond at a lower cost than it was originally purchased, which can result in the buyer receiving a diamond of lower gemological grad or smaller carat size. It is this factor making this type of insurance more affordable that gives it the popularity it enjoys in spite of the buyer beware status.
The third type of diamond insurance is called an agreed value, or “valued at” policy. This is the rarest type of insurance for diamonds although many insurers say it would be the best to have. Buyers of diamonds generally choose not to go this route due to the negotiations with the insurance company involved in agreeing upon the value of the diamond. It only covers that amount should the diamond be lost or damaged beyond repair, and the appreciating values of diamonds lead people away from this insurance.
No matter which of these policies a person may choose, he or she needs to remember a few other keys. First, homeowner’s or renter’s insurance should be checked thoroughly, for if the diamond is stolen from the home, those policies often cover the theft. Also, living in a high crime area means the higher rates on all policies, so be scrupulous about coverage and prices, shopping around with several companies.