The physical property portion of your house insurance policy includes the belongings you keep in your home. Most homeowners just assume that this protection extends to all of their possessions, even those of extreme value. In reality, though, a standard homeowners insurance policy provides only limited protection, if any, for high-value items. This means that items like wedding rings, family heirlooms, and other precious jewelry would probably not be fully protected by a basic house insurance policy. Read on for more information on whether your policy covers your jewelry and why the coverage is so limited if it does.
Depending on your home insurer, your policy will likely have individual item coverage limits of $1,000-$2,000. In other words, if an item with a value that exceeds this limit is lost or damaged, your insurer will only reimburse you for the amount of your coverage limit.
Your policy deductible will also apply in these situations, which will reduce your benefit even further. For example, you might have a wedding ring that is worth $10,000. Your home insurance per-item coverage limit is $1,000, and you have a deductible of $500. Let's say you drop your ring down the drain and file a claim with your home insurer. Because of the policy's limit and the deductible, you will only receive $500 of coverage ($1,000 limit less a $500 deductible) for the loss of
a $10,000 ring.
Insuring Items of High Value: Policy Riders
Home insurance policies will cover items of high value, but you will need to add what is called an endorsement, or rider, to the policy. Any possessions you have that exceed your policy's per-item coverage limits will need a separate rider for full coverage. Policy riders are also referred to as floater coverage. With jewelry, you will probably need to have the item or items appraised that you would like to insure. Based on the appraisal, your insurer will then extend the appropriate special coverage for the items in your house insurance policy. Of course, your premiums will go up after you add riders to your policy. However, homeowners can usually purchase thousands of dollars of additional protection for only slightly higher premiums.
Coverage for Loss Due to Theft
Even if you purchase a special rider to cover your jewelry, some insurers will not apply the coverage to losses that result from theft. Most house insurance policies have very specific limitations with regard to the amount of losses they will cover due to theft. If you would like to protect your jewelry or other valuable items from theft, then you will likely need to purchase a theft coverage endorsement. With some house insurance companies, you will not receive any benefits for stolen jewelry unless you have this specific endorsement on your policy.