How To Buy An Engagement Ring: Don’t Forget the Insurance

Part 5 of a 6 part series on buying an engagement ring  

It was a couple of years ago.

A time in Atlanta when it seemed that if it rained it had to be associated with torrential winds.

We couldn’t just have a light shower. It had to have tree-swinging, gust-filled winds along with it.

I had the bright idea of running some errands during one of these storms while my roommates were back at the house.

As I was checking out at one of the stores, my phone rang.  Very nonchalantly, one of my roommates broke the news.

“Hey, Matt.  Nothing to worry about over here, just wanted to give you a heads up before you got home.  A tree has made its way into the kitchen.”

Standing in front of the cashier I responded like any other person would “WHAT?! A tree is in the kitchen?!”

“Oh, yeah, one of the trees from the backyard has fallen on the house.  But don’t worry, it’s not too much damage, and we are all ok.”

So, wanting to just make sure I understood I asked, “You are saying that a tree fell on the house?” And that was the case.

Finishing up my purchase, I hung up the phone and the cashier said, “That doesn’t sound too good.”

They were right.  Although my roommates were kind to alert me in a very calming manner, the issue was all but calm.

A tree had fallen and taken out my entire deck and a portion of the kitchen.  But it didn’t stop there.  The tree was a large one, and it had also fallen on the house next door, and limbs made it to the house two doors down.

Spending the next couple of hours in the rain with a tree removal company was made a bit more fun with a couple of beers with the neighbor.  But the next day, reality hit.  I had to fix my damn house!

But this was something out of my control, and fortunately, I had insurance.

Now, dealing with the insurance company was a whole different story, but it was a time cost, rather than money spent.

Three months later, the house and deck were fixed and no money had flowed out of my pocket.

But what the hell would I have done without insurance?  I wasn’t in a position to get everything fixed I needed right then and there.  I would have had to postpone many other expenses and things I wanted to do.

My savings plans would have been all jacked up.  Insurance allowed me to get the roof back over my head and still live my life as I had planned prior to “tree-gate.”

Now home insurance is required when you buy a home, but the story goes beyond that.  It focuses on the importance of insurance for some of your most valuable items.

 

The insurance dilemma

I’m not an insurance agent.  I can’t sell it or make money off it.  I just use it… and mainly on the most important aspects of my life.

And given that the engagement ring I recently bought is one of the most expensive purchases I have made in my life, I found it necessary to protect it.

Insurance doesn’t tend to be the first thing someone thinks about when it comes to buying a ring.

I mean, we have already reviewed some of the important characteristics.  Those four Cs.  But those are just variables in the price of the ring, and what we tend to focus on.

When buying the ring, we focus on getting the perfect diamond for our baby.  We inherently think that nothing will ever happen to that beautiful thing because it will be on her finger all the time, right?

The steps we usually take for an engagement ring are:  Finding out what she wants; Figuring out what it costs and then determining how best to surprise her.  And after we propose, we think that all is done with the diamond on her finger.

The last thing we want to think about is having to spend more money on this piece of jewelry on which we have already spent a nice chunk of change.

Just think about it.  Do you have life insurance?  What about disability insurance?  I know you have car insurance.  Do you really think your car is more valuable than your life or your income stream if something were to, God forbid, happen to you, though?

It’s the issue we have with insurance.  We don’t tend to wake up in the morning excited to go and talk about spending money on insurance.  It’s not a fun thing to spend money on.

 

We must protect this (diamond) house!

And so that brings me to the real problem in this whole series… insuring the ring we spent so much time researching and saving for.

The difficulty with insurance is that we don’t really understand it.  The contracts aren’t intuitive.  We might not really know how much of it is needed.  So, because of all these things we just stay away.

But a diamond ring is a big ticket purchase, and it has huge sentimental value.  If something were to happen to it, we would want to replace it.  It is supposed to be the thing “that lasts forever.”

And more importantly, if we don’t insure it, we will likely need to adjust our savings plans if anything were to happen to it.

Yeah, we could always just start saving for another diamond and go out and buy it.  But what if we have kids and are trying to save for college?  Or maybe that dream vacation we are saving for?  Or maybe that next house.  All that could be interrupted if we had to spend money on a new diamond ring.

 

Okay, now how to protect this diamond

This is one last step we need to take.

We have learned about the four Cs.  We have saved the money and before we get to the proposal, let’s make sure all the hard work we have already done is protected.

There are multiple ways for us to look at protecting this.

If you have a home, then utilizing your current home insurance is one option.  If you don’t own a home but do have renters insurance, this too is an option.

If you have neither, then there are specialty insurers that will cover just this piece.  One company that I found in my research is Jewelers Mutual.

Now here is the difficult part, determining which option is best for you.

Your home insurance covers valuables.  However, it is likely not enough to cover the cost of the beautiful ring you are about to put on your (hopefully) future bride’s finger.  Most insurance companies will only cover up to about $2,000 for jewelry and valuables.

The problem with that is the coverage includes all jewelry, not just the diamond ring you bought.

So you have some options.

An endorsement – This is basically an added benefit on top of your current homeowner’s insurance policy.  You would want to contact the company that insures your home and ask them for an endorsement.

This tends to cost between $1 to $2 per $100 of the cost to replace the ring.  So if you buy a ring that costs $6,000, then you will likely be paying between $60 to $120 extra on your homeowner’s policy per year.

The downside to going the endorsement route is that you are still only covered for specific situations.  You may not be covered for all possible scenarios for the ring.  Most importantly, it may not cover you for losing the diamond.

That’s where the next option comes in.

Scheduling it – With this option, you are adding a separate clause to your homeowner’s policy.  And it is meant to cover specific objects, like a ring.

The benefit of this is that it covers all types of risks associated with the ring.  The dog eats it, the ring falls down the toilet or you just straight up misplace it (a real bad misplacement!).

Also, you don’t have to worry about any deductible for the claim.  So, nothing will have to come out of pocket if something were to happen.  You will get the full reimbursement.

This type of coverage can cost in the range of $12 to $13 for each $1,000 in value.  This isn’t much more for a complete coverage option.  So, for a ring that costs $6,000, you are looking at an additional $75 or so on your home insurance.

But we aren’t done yet.

We have to choose how we would want to be reimbursed.  Either, we can go the route that the insurance company provides us a check for the value of the appraisal that they have on file.  Or we can tell them to replace the diamond exactly.  Meaning the same cut, clarity, color and carat.  No matter what it costs at that time, the insurance company would need to replace the diamond.  This is the route I went.

 

Let’s break down even simpler

Alright, you want things broken down even more, here is a step-by-step process for you to follow.

  • First – Get the ring, duh!
  • Second – Have the jeweler (as long as they are certified) appraise the ring.  If they are not certified, then find someone who has a graduate degree in gemology and who is a member of a national appraisal society.  One that the GIA recognizes.  Remember that the GIA is the organization that created the ratings for the 4 Cs.
  • Third – Contact your home insurance provider or your insurance agent and ask them how much it would cost for both an endorsement and also to add a rider for the ring.  If you don’t have a homeowner’s insurance policy, then go to the next step.
  • Fourth – Contact a specialty jewelry insurance company, like Jewelers Mutual.  See what they will charge to insure your ring.
  • Fifth – Determine if you want to get reimbursed for the appraisal or if you want them to buy you the exact same diamond.
  • Sixth – Make a decision as to which option best provides the coverage that you want and that the cost fits into your budget.

The one thing to not forget is that if you go the home insurance route, you will want to make sure that if you move, to carry over the endorsement or the rider.  You don’t want to make the move and then forget about the diamond.

 

House and diamond should be one of the same

Now we are where we want to be.

We have found that blinging diamond that will make our baby gush, and she can also wear it without worry.

Random stuff happens.  Trees fall on houses, diamond rings fall off fingers.  We just want to be sure that all the effort we put into buying the diamond (not to mention the money we saved) is protected.

And this way, we don’t have to worry about altering our savings goals because of a random mishap.

Yeah, this is the boring stuff.  But it is also the stuff that we are thankful for when it comes time needing it, if ever.

Now, I am not saying that this will lead to you having a great experience with the insurance company when the time comes that you need to use your policy.  Because if you have had to tap into an insurance policy, you know the difficulty surrounding dealing with these companies.

But we are now aligning our interests with the necessary protections.  Our most prized objects will be covered.

And getting on the knee to ask our girl to marry us will be easier knowing the thing in the black box is fully covered.