If you've been automatically including your clients' jewelry under the Homeowner's policy, consider this:
The average engagement ring would NOT be adequately covered under the typical HO policy.
A wedding industry site that publishes all kinds of statistics about weddings in the US came up with some interesting data for agents and insurers. A recent survey showed that the average price of an engagement ring is $3,239.
Jewelry on HO? NO!
The typical Homeowner policy covers theft only up to $1,500 per item. This means that, in case of a theft loss, the engagement ring would be way underinsured.
Even increasing the aggregate limit doesn't increase the per-item limit. An endorsement might say, for example, "Misc. jewelry — $5,000" but the item limit would probably remain at $1,500—still leaving the ring underinsured.
Do clients understand these limits on their Homeowner policy? Do agents discuss these numbers with their clients? Are most agents and their CSRs even aware of the HO policy's limits and how they affect the insured's jewelry coverage, or how deductibles are applied?
The Homeowner's policy does not respond well to jewelry losses in other ways. Jewelry claims most frequently involve the jewelry getting lost (mysterious disappearance), or a stone breaking or falling out. None of these events is among the perils listed in the typical HO policy.
In fact, the engagement ring, which may be the most expensive thing a young couple owns, is often left unscheduled. This oversight can come back to haunt not only the client, but also the agent.
In case of a loss, the client will be surprised to find that her jewelry was not covered as she thought it was and she'll probably hold the agent responsible. Some agents pick up new clients precisely because the previous agent did not suggest coverage that was necessary. In some cases the agent may be exposed to E&O problems for failing to offer appropriate coverage, since it's not unusual for an engagement ring to be worth $10,000-$20,000 or more.
Scheduling is the appropriate way to cover jewelry. It protects clients as well as the agent's business.
Jewelry can be scheduled on the Homeowner policy, but there are still drawbacks: perils like mysterious disappearance may not be covered; a high deductible may apply; and there may be a host of other coverage issues.
Agents should be aware, and make their clients aware, that a jewelry loss could affect their HO coverage. HO losses hit CLUE and PILR reports, which could lead to higher premiums or even non-renewal of their HO policy. As agents well know, a Homeowner policy is difficult to re-market after a loss. This is especially true after a mysterious disappearance loss—which is the most common type of jewelry loss.
Some insurers require jewelry to be scheduled outside the Homeowner's policy and they offer separate jewelry policies. If the HO insurer does not offer a jewelry policy, the agent must take the initiative by seeking out a standalone policy. But note that almost all of these carriers still report the loss to CLUE!
Scheduling jewelry on a standalone policy, not with the HO carrier, is the best solution. It has several advantages:
- Higher item limits
- Fewer exclusions
- Jewelry losses do not impact HO coverage (unless carrier reports to CLUE, as most do!)
- Some carriers, such as JIBNA, do not report losses to CLUE and PILR.
FOR AGENTS & UNDERWRITERS
Discuss jewelry with your clients to be sure they are adequately insured. Many people assume that all their jewelry is covered by the Homeowner's policy. Explain the item limits and the potential impact of jewelry claims on their HO coverage.
Insurance for wedding jewelry is often overlooked by newlyweds and then the issue is forgotten. Remember that the average engagement ring exceeds HO limits!
Investigate standalone jewelry policies, and become an authorized agent if necessary, so you can offer your clients the best coverage. It may surprise you to learn that there are admitted, A.M. Best A-rated carriers that provide broader coverage at lower rates.
Review coverage details, focusing on both covered losses and any valuation definitions.
Check for duplicate coverage claims with two different companies. Check directly, or through the carrier you work for, for PILR, CLUE, or other property reports, for duplicate claims.
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