Diamond Ring Insurance: Understanding Value & Coverage

Diamond ring insurance may not work the way you think it does. Diamond rings are worthwhile investments that tend to hold their value over time. However, there are times when they may appreciate or depreciate in value.

Reappraisals for Diamond Ring Insurance

Diamonds depreciate when they are first bought. The cost you paid for the diamond includes sales tax and other fees the store may have charged. An insurance company is not going to compensate you for those costs.

If all else remains the same, diamonds tend to appreciate in value over a number of years. However, a bad economy or quirks in the market may cause a diamond to depreciate. Diamond rings may also depreciate due to normal wear. Therefore, an appraisal should be done about every three years to keep your policy up to date.

Is Diamond Ring Insurance Fair?

Most insurance companies are not going to pay you the amount your ring is worth. The amount they will pay out is tied to the type of policy you have.

If you have an actual cash value policy, the insurance will pay out the amount the ring is worth less depreciation.

Replacement value pays the amount the insurance company would have to pay to replace the ring. The company can get the ring for much less than you paid for it, so it is best to just have them replace the ring. Be sure your initial appraisal has as much information as possible about the ring, including brand name and designer. If that information is not there, the insurance company will replace your ring with a similar one, and that may not be as similar as you would like.

A valued at policy pays out the amount of money you and the insurance company previously agreed on. This means that you can insure your ring according to sentimental value. As you can imagine, not many insurance companies do this.