If you're giving or receiving a valuable piece of jewelry this holiday season, you might want to wrap it up with more than ribbons and bows.  You may need to alter your insurance package to properly cover your new valuable possession.  Every year more than $1 billion of jewelry is lost or stolen in the United States. Fortunately, there are precautions you can take - such as purchasing adequate insurance and having your jewelry appraised - to make sure that you recover financially from any jewelry loss.

First, it's important to understand that a standard homeowner's policy may not provide enough protection to fully cover your jewelry.  Homeowner's policies typically pay up to $1,000 to $2,000 for jewelry loss, once you've met your deductible.  While most homeowner's policies cover jewelry losses from fire, storms or theft, many provide only limited coverage for lost or misplaced items.  So if your five-year old accidentally flushes your engagement ring down the toilet or you lose one of your diamond earrings while out to dinner, most standard insurance policies won't respond, leaving you out of luck. 

The solution is to buy a jewelry "floater" -- an add-on to your policy.  The floater provides "all risk" protection for each item of jewelry you list.  Besides fire and theft, it typically covers loss and damage to the item, anywhere in the world.  Purchasing a jewelry insurance floater with each piece individually listed and insured will ensure that you are fully covered. 

You can insure your items for their full value without a deductible.  There are a number of jewelry coverage options available.  Itemized coverage enables you to list a value and description of each item while blanket coverage provides an aggregate limit of coverage for multiple items without each item having to be listed.  There is a sub-limit for each item of jewelry coverage under the blanket coverage option.

Up-to-date Appraisal 

When you purchase jewelry insurance, an up-to-date appraisal will be requested to verify the description of your jewelry and its fair market value.  A current appraisal can help ensure a prompt and fair settlement in case of a claim.

To make certain the insurance continues to reflect your jewelry's fair market value, you should have your jewelry appraised every two to four years.  Your insurance broker should be notified immediately of any changes in value.  

Jewelry Replacement 

Some insurers will insist on making a jewelry replacement purchase for you.  For example, they may replace your diamond stud earring with one that might match the original diamond's size and shape, but not its quality, cut or setting.  This is where an accurate, up-to-date appraisal will come in handy. 

Fortunately, some insurers will offer you the option of replacing your jewelry at the store of your choice or accepting a cash settlement in the case of a covered loss.  However, it is best not to leave that to chance and ensure you have the broadest coverage available.

You Get What You Pay For 

Keep in mind that jewelry insurance differs in cost across the country depending on use, storage, type of home and security system.  The number of pieces insured also affects the premium, as does keeping jewelry in a bank vault.  In general, it costs more to insure one extremely valuable piece than to insure several less expensive ones. 

Proper diligence, expert advice and close attention to market changes are critical success factors in building and protecting your jewelry.  The chances are your homeowner's policy isn't enough to replace your jewelry's value if your collection is lost, stolen or damaged.  The best things in life are worth protecting.  Speak with your HUB broker to inquire about the right coverage to protect your investment.