Jewelry Insurance vs. Homeowners Insurance: Which Do You Need?

Don't just assume a standard home insurance policy takes care of everything.

Expensive jewelry can be a great gift to pass onto heirs or a way to spice up a formal outfit, but its small size and high cost makes jewelry a favorite target of thieves. Many think that their homeowners insurance will cover any sort of jewelry loss or theft, but this isn't always the case.

Below, we'll look at what coverage a standard homeowners insurance policy provides for jewelry and how that stacks up to stand-alone jewelry insurance.

What coverage does a standard homeowners insurance provide for jewelry?

A typical homeowners insurance policy protects jewelry from covered perils, including house fires, storm damage, and theft. But most policies impose a $1,500 cap on jewelry payouts. This may not be enough for those who have expensive watches or heirloom jewelry worth thousands or tens of thousands of dollars.

And in actuality, the payout the homeowner would receive in the event of a jewelry claim would be less than $1,500, because the homeowner would have to pay some of the costs as their deductible. If the deductible is $1,000, the homeowner would only receive a $500 check for their lost or stolen jewelry, even if the actual value of the item was $20,000.

It's also worth noting that a typical homeowners insurance policy doesn't cover things like normal wear and tear or accidental loss or damage. Dropping an expensive ring down a sink drain or losing it in the ocean will leave the policyholder on the hook for the full replacement cost.

It could also increase homeowners insurance premiums in the future, just like filing a claim for any type of storm damage. So it's not the best fit for those who want comprehensive jewelry coverage.

What coverage does a personal articles floater provide for jewelry?

Some home insurance companies enable homeowners to add a personal articles floater to their homeowners insurance policy. This increases the cap on how much the insurer will pay for jewelry that's lost due to a covered peril or stolen. It may also expand the circumstances under which a loss is covered. For example, a personal articles floater could cover jewelry that's accidentally lost, while a traditional homeowners insurance policy wouldn't cover this.

The advantage to purchasing one of these policies is convenience. Homeowners can manage their jewelry and their home insurance coverage in one place and they won't have to worry about juggling multiple deductibles. In fact, they may not pay a deductible at all for jewelry-related losses.

But often, insurers require those adding personal articles floaters to their policy to have each piece appraised in order to get an accurate assessment of its condition and value. Homeowners will likely have to pay for this out of their own pocket.

What coverage does a stand-alone jewelry insurance policy provide?

Stand-alone jewelry insurance policies are policies that specifically cover jewelry. They're usually underwritten by specialty insurers.

These policies are generally more flexible than traditional homeowners insurance. They can cover jewelry up to much higher limits and it's often possible to get coverage for accidental loss or even things like a broken necklace clasp. And since this policy is unaffiliated with homeowners insurance, there's no risk of a claim raising premiums at the next policy period.

Jewelry insurance costs vary depending on the number of items being insured and their value. One popular underwriter, Jewelers Mutual, charges 1% to 2% of the jewelry's value per year. So a $1,000 item would cost about $10 to $20 annually to insure. There's also a no-deductible option for those who don't want to pay anything out of pocket in the event of a claim.

Compare all the options

It doesn't hurt to explore several of the options above before making a purchase. Just be sure to read the fine print and reach out to the insurer for clarification as necessary. And don't forget to update the policy when adding more jewelry to the household's collection.