Types Of Diamond Insurance Policies
There are three main types of diamond insurance depending on which state you
live in as well as the issuing company. Many diamond insurance policies are very
similar but vary according to location, issuing company of the insurance and
sometimes even the type of diamonds that are being insured. Strangely enough,
all diamond insurance policies are referred to Marine insurance policies.
The three main types of diamond insurance are as follows:
Actual cash value
Replacement
Agreed value
With actual cash value types of diamond insurance the diamond insured is
replaced by the insurance company using the following equation: current cost to
replace the diamond – depreciation = amount paid to insured diamond owner.
Though depreciation is not as big a factor when it comes to timeless gems like
diamonds, there are still changing prices and degradation of gem settings.
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Replacement is the most common type of diamond insurance that is available
today. Appraisal of insured diamonds is carried out in one of two ways.
Sometimes the insurance company will set a limit that, regardless of other
factors, the insurance company is obligated to pay.
The second type of replacement diamond insurance is where the company
establishes the amount to be paid out based on premiums paid by the insured. The
payout rate depends on the location, as high crime areas will pay out more
often.
Insurance companies are generally able to find replacement diamonds for much
less than the customer originally spent on the diamond. For example, a diamond
that cost $30,000 may be replaced by a $9,000 that matches the description of
the original gem, because diamond insurance companies are able to buy diamonds
direct from diamond manufacturers.
In the situation described above, for example, if you lost the diamond and
wanted a cash payout as a replacement, you would be issued a check for $9,000 as
that is the price of the diamond as valued by the insurance company and its
ability to replace the diamond in question for much less.
As far as I know there are only two large diamond insurance
companies that offer agreed value insurance. These are Atlantic and CHUBB. With
this type of policy the insurance company pays out the agreed value of the
diamond as long as it is not grossly overvalued.
If you can find agreed value insurance for your diamond, do it! These policies
are not more expensive to maintain than other types and are much more likely to
pay out an amount closer to the amount your spent on the diamond originally.
When considering various diamond insurance policies be sure to read everything,
as most insurance companies will do only what is required per their own
legalese. Take the time to read and research the policies in question and you’re
sure to decide on an appropriate policy.
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