Insuring Tokens of Affection and Other Precious Possessions

It’s the time of year when romance is in the air, but tender feelings could prove costly for couples who are moving toward marriage. According to one industry survey, the average price of a new engagement ring was $5,200 in 2010, and 12% of couples spent more than $8,000.¹ For young couples starting their lives together, an engagement ring may be one of their most valuable possessions.

Do you have cherished jewelry or other items that would be expensive (or impossible) to replace? Most homeowners, condominium, and renters policies have limited coverage for your personal property. Adding an endorsement (or floater) to your policy (or a separate personal property policy) may provide additional coverage for especially valuable articles.

Pricey Personal Property

Basic homeowners, condo, and renters policies commonly have a maximum coverage limit for the combined value of certain property. Theft of jewelry, for example, may be limited to $1,000 or $1,500. There are other disadvantages to the personal property coverage in standard policies, including the fact that they generally protect you only from certain incidents (damage or accidental loss are typically excluded) and may be subject to a high deductible.

A Scheduled Personal Property, or SPP, endorsement to your homeowners, condominium, or renters policy can be customized to cover single items or a class of luxury goods, and it typically covers more incidents (except those that are specifically excluded), including theft, mysterious disappearance, and sudden, accidental loss. Examples of classes of personal property other than jewelry include silverware, computers, cameras, sporting goods, guns, musical instruments, fine art and antiques, coin or stamp collections, and other valuable collectibles.

So if your golf clubs never make it back from Hawaii, your diamond engagement ring is lost in the ocean, or your notebook computer accidentally takes a tumble, an SPP endorsement could help you recover the full replacement value, up to your policy limits. And your claim could be subject to little or no deductible.

Are Your Trinkets Properly Insured?

To purchase SPP coverage for personal property, you need a detailed description or photo of the items and a bill of sale or other documentation of their value. For some valuables, your insurer may request a recent appraisal from a recognized dealer or authoritative body.

Long-term policyholders who have collected jewelry pieces through the years may be surprised to learn that some items may be worth more now than they were when originally purchased or received as a gift. Gold sells for more than six times per ounce than it did just 10 years ago, and many other precious metals have also risen in value. Therefore, if you already have a policy designed to help protect your fine jewelry, you might be underinsured if your coverage has not been updated to reflect the higher current value.²

If you happen to own personal property whose current value or exposure to risk exceeds the coverage offered in your insurance policies, ask your insurance agent about the costs and benefits of SPP coverage for those particular belongings. You may find it's a relatively small price to pay for the added protection.

1) TheKnot.com, 2011
2) The New York Times, April 20, 2011

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. Copyright  © 2012 Emerald Connect, Inc.