When it comes to jewelry insurance coverage, most unendorsed homeowner's or renter's insurance policies present two primary issues for an insured:1) mysterious disappearance coverage; and 2) sufficient coverage limits in case of a loss.
Generally, unendorsed homeowner's or renter's insurance policies don't provide coverage for mysterious disappearance of jewelry such as when the diamond falls of the ring and disappears, without necessarily it being stolen. Even in the rare circumstance that there is some limited coverage for mysterious disappearance of jewelry, usually unendorsed policies provide only limited coverage amounts for unscheduled jewelry, such as $1,000 to $5,000 for all items (depending on the policy language).
So what is "mysterious disappearance of jewelry?" and how may an insured resolve this coverage gap?
When an item such as an engagement diamond ring has disappeared, was misplaced, fallen off, or went missing without the insured knowing exactly what happened to it, an insured may have a mysterious disappearance of jewelry insurance claim.
Most homeowner's or renter's policies have limited protection for jewelry, watches, furs, silverware, and collectibles, and they typically impose a limit of between $1,000 and $5,000 for the loss by theft for jewelry, luxury watches, and precious stones. This means regardless of the actual value of the item or items lost, the insurance company won’t pay more than $1,000-$5,000 (depending on the policy language). But that's only if the item is stolen. If any item just mysteriously disappears, usually, there is no coverage.
To protect against the mysterious disappearance coverage gap, an insured may consider either adding a scheduled personal property endorsement to his or her policy (with agreed value preferably), or may purchase a separate personal articles insurance policy.
Usually, choosing one of these options would provide coverage for mysterious disappearance of jewelry (depending on the policy language). It is also advisable for an insured to request coverage on an Agreed Value basis to guarantee that he or she will receive the exact amount of coverage that he or she wishes to recover in case of a loss.
Choosing one of these options would also provide coverage for theft of scheduled jewelry or other personal property items up to the limits requested on an Agreed Value basis without an insured having to worry about the theft limitation included in most homeowner's or renter's insurance policies.
An insured must review his or her policies at least once a year, especially immediately before or after a major life event (engagement, marriage, birth of a child, etc), or whenever he or she purchases or receives any jewelry or other valuable items.
Disclaimer: This post is for informational purposes only. It does not create an attorney-client relationship, and isn't intended and should not be construed as the providing of legal advice.
About the Author
Rabih Hamawi is a principal at the Law Office of Rabih Hamawi, P.C. and focuses his practice on representing policyholders in fire, property damage, and insurance-coverage disputes against insurance companies and in errors-and-omissions cases against insurance agents. He may be reached at (248) 905-1133.