If you have valuable jewelry, you probably want to make sure it’s protected in case anything happens to it. What you might not know, though, is whether your homeowners insurance policy already provides coverage. You don’t want to spend money on a separate policy if you don’t need one, but you also don’t want to risk going without coverage.
Before you can determine what covered you need for your jewelry, you need to know a little about how home insurance works.
What Does Homeowners Insurance Cover?
A standard homeowners insurance policy provides several types of protection.
- Home structure coverage provides a payout to cover replacement or repair costs if your house is damaged or destroyed in a covered peril, such as a fire or storm.
- Personal belongings coverage provides a payout to cover replacement or repair costs if your personal belongings are damaged, destroyed or stolen.
- Additional living expenses coverage provides a payment to cover living costs, including a hotel stay, if you cannot stay in your home temporarily because of a covered loss.
- Liability protection provides coverage in case you or a member of your family is sued for a covered reason, such as an injury on your property. It may also provide no-fault medical coverage without the need for a lawsuit.
For the purposes of this discussion, we are most concerned with the personal belongings coverage provided in a typical homeowners insurance policy.
Homeowners Insurance Covers Personal Belongings, BUT…
At this point, you might be thinking that you have your answer. A standard homeowners insurance policy provides coverage for personal belongings. Your jewelry counts as personal belongings, so your jewelry is covered.
That’s true, but you also have to consider your policy’s limits.
Your homeowners insurance policy has a limit, which is the maximum benefit that will be paid if your home is damaged or destroyed. Ideally, this limit should be enough to cover the replacement cost of your house.
However, you will have different limits for other types of coverage provided under your homeowners insurance policy. For example, even if your house is insured for $500,000, your policy might only provide $100,000 in personal liability coverage.
Likewise, your personal property coverage will typically be less than the dwelling coverage that protects your house structure. According to the Insurance Information Institute, homeowners insurance policies often provide personal property coverage at about 50 percent to 70 percent of the policy limit.
If your policy limit is $500,000, your personal property coverage might provide insurance benefits that max out at about $250,000 to $350,000. Remember, this is for ALL of your personal belongings, including your furniture, appliances, electronics, clothes and other household items. Depending on what you own, this may or may not be enough.
Additionally, policies typically have limits on individual items. The Insurance Information Institute says that jewelry is often capped at around $2,000. If you have a piece of jewelry that’s worth significantly more than that, you don’t have adequate coverage from a standard homeowners insurance policy.
What If You Need More Jewelry Insurance?
If your homeowners insurance policy does not provide enough coverage for your jewelry, you can obtain additional coverage by scheduling your jewelry. This means that your jewelry is listed separately on your policy with a clause that provides additional coverage. This type of coverage may also be called an endorsement or floater.
Do I Need to Have My Jewelry Appraised?
Your insurer may require you to have your jewelry appraised before you can have it scheduled and add extra coverage. Having your jewelry appraised is also important to make sure you are insuring it for the correct amount.
What Could Lead to a Jewelry Claim?
You will be able to file a claim for your jewelry if it is lost, stolen or damaged, as long as the incident is a covered peril under the terms of your policy.
You may even be able to file a claim if your jewelry is stolen outside of your home. For example, if the jewelry is stolen while you are wearing it out or while you are traveling on a vacation, the theft may be covered.
What Other Items Might Need Special Coverage?
Jewelry is not the only item that may require additional insurance coverage. Any high-priced item deserves attention. This could include musical instruments, art pieces or special collections that you have.
If you are not sure whether an item has sufficient coverage, check your insurance policy for details on personal property limits and exclusions. If you think you need additional coverage, or if you aren’t sure, contact your insurance broker for advice.
Understand Your Homeowners Insurance Policy Terms
We’ve covered some of the typical coverage issues and possible limits in home insurance policies, but every policy is different, and insurance companies may provide slightly different terms.
Your policy limits may be higher or lower. For example, your policy might have a coverage limit of $2,000 for a single piece of jewelry, but it might have a limit of only $1,000 – or your policy may include different exclusions and requirements. See which perils are covered under your policy and if there are any other requirements you should be aware of.
Also be aware of any deductibles you have. The deductible is the amount you have to pay out of pocket before the insurance company will pay its share. Just as the limit can vary from coverage type to coverage type, the deductible can also vary.
Make sure your limits are sufficient. If your house gains value, you may need to increase your coverage limits. Likewise, if you acquire new personal property, such as jewelry or art, or if your property increases in value, you may need to increase your limits and adjust your schedules.
Homeowners insurance can be complicated, but getting it right is essential. Otherwise, if anything goes wrong, you might not have the coverage you need. If you have any questions about your policy, including whether or not you have enough coverage for your jewelry, contact your Higginbotham broker for assistance.