Friday, Jun. 06, 2008

When should I insure jewelry and laptops?

When is it a good idea to get insurance policies for jewelry, digital cameras or golf clubs that may not be covered by other insurance?

You can buy personal article policies, otherwise known as floater policies, that insure any-thing from diamond rings to art-work to musical instruments. They have the option of buying the policies as add-on coverage to their homeowners or renters insurance or as stand-alone policies.

State Farm spokesman Kip Diggs said 70 percent of floaters are bought to cover jewelry, and one of the fastest growing areas of floater policies is for jewelry pieces that cost $25,000 or more.

More often, though, consumers are buying policies to cover their treasured rings, necklaces and earrings that cost more than $1,000 or $2,000, prices that can put them above the range of what is covered in their standard homeowner or renters policies.

Mike Maley, a vice president at Jewelers Mutual Insurance Co., said separate policies to cover jewelry cost between 1 percent and 3 percent of the value of the item. And the size of the market is potentially big, Maley said, noting that Americans spent $63 billion on jewelry and watches in 2007.

Besides $25,000-plus jewelry, another growing area for floater insurance is computers, State Farms’ Diggs said. That has doubled in the past five years, with about 81,700 add-on or standalone policies in place at the end of 2007.

The 2 million floater policies State Farm has sold, Diggs said, include coverage for things like pianos, paintings and postage stamps.

Most insurers offer two options for coverage. One type of policy pays what the item would be worth when it was lost, assuming some depreciation in value, while replacement policies pay the cost of replacing the item.

Maley said consumers must settle on their personal cost threshold, and decide whether they want a policy, based on their own risk tolerance, where they live and other factors. One thing is consistent, Maley said, and that is the reason for the majority of claims. Most are attributed to accidental loss, or what insurers re-fer to as “mysterious disappearance.”

“They left it on top of the soap dispenser at the airport, and it went down the drain,” Maley said of engagement rings. “Somewhere out there, there’s a lot of lost jewelry.”