Unfortunately, when shopping for home insurance most people are only concerned about how cheap it is, or how much money they can save. They rarely want to talk about what coverages they will get or not get. I’m all for saving money, but what good is saving money now if it costs much more in the end when you file a claim only to find out there is no coverage. Why not get the appropriate coverage, and get it for the best price?
One of the most overlooked parts of a homeowner’s policy is the internal limits on certain items of personal property. Most people don’t have a clue what is meant by internal limits. I suppose they are called “internal” limits because the information is not readily available if you don’t look for it or ask your agent about it.
Home Insurance Policies consist of 6 basic coverage sections or parts. I will list them here.
Coverage A: Dwelling
Coverage B: Other Structures
Coverage C: Personal Property
Coverage D: Loss of Use
Coverage E: Liability
Coverage F: Medical Payments
Because jewelry is considered personal property we will focus on Coverage C. The amount of coverage C you have on your policy is generally an automatic calculation as a percentage of coverage A. For instance, if a home was insured for $100,000 for the structure, your policy would provide usually 70% to 75% for Coverage C, or $70,000 to $75,000 for personal property. This would be an additional amount specific to personal property. That seems like plenty to cover the average person’s jewelry right? Well perhaps, but perhaps not. Even though the policy would cover up to $70,000 for personal property (obviously if you spent that full amount on jewelry there would be no money to replace other items) there are provisions that limit the amount the policy will pay for jewelry when the loss of the jewelry is from theft. Generally speaking, the standard homeowner’s policy will limit the payout for theft of jewelry to $1,500.00. That’s right, $1,500. In other words, that a $5,000 diamond wedding ring if stolen, you would receive a check from your insurance company for $1,500. Certainly not something anyone would be very happy about.
There is a simple way to fix this would be “gap” in coverage; that is to schedule your valuable jewelry onto your home policy so it receives its own coverage limits. This can be done for either a “market” value or an “agreed” value. When jewelry is scheduled it receives additional coverages as well, such as “mysterious disappearance,” in addition to the increased limits for theft.
A lot of people think nothing bad will ever happen to them, but we see it frequently and routinely. Even something as innocent as a diamond stone falling out of its setting and being lost forever. It’s only a second tragedy to find out the home insurance policy often doesn’t provide sufficient coverage for these instances. You not only lose the jewelry that has sentimental value but then don’t have insurance to cover the loss appropriately. We recommend talking to your agent about scheduling your jewelry or other valuable items such as firearms, silverware, furs, and collectibles so you have the appropriate coverage should anything bad happen.