Confused about engagement ring insurance

waxingsatirical

Hi,

I've recently bought an engagement ring and am looking at getting it insured. The jeweler told me that I should quote his valuation when getting insurance, but this was about 50% over the build cost!

I would have insured it at about 90% of the build cost... then if anything happened, pay the difference out of pocket.

Can anyone explain why this is so counter intuitive?

Also, anyone got some ballpark figures of how much this should cost? The ring was £6000 to build. We don't have any contents insurance (ring is our only valuable possession) so can't wrap it up with that.

Thanks.

InsideInsurance

It would be sensible to get a different company to do a valuation on the ring, for a variety of reasons. In the first year or two you can just use the invoice price but after that a valuation is sensible.

Insurers do not ask what value you want to insurer it for they ask you how much it is worth. You may have a £10,000 JLC watch but decide you only want to insure it for £2,500 because you'd be happy to replace it with a Tag if something happened to it but the chances of a thief deciding to steal a £10k watch is different to the chances of them wanting to take a £2.5k watch.

Insurers also can apply averaging clauses so if you under insurer your goods then they will reduce your settlement by the percentage you underinsured by. So with the above example rather than paying out £2.5k if it was damaged but repairable they would pay out 25% of it because it had been under insured by 75%

Certainly double check the cost of buying contents insurance including the ring -v- buying dedicated jewelry insurance. Certainly for us its cheaper to insurer the whole home inc the Mrs jewelry than to just insure her jewelry.

Insurer for the full value of the ring but put in a larger excess to reduce the premiums. Be careful though as sometimes a bigger excess gives a higher premium (though more often with Motor than non-motor)

Caladan

InsideInsurance wrote: »

Insurer for the full value of the ring but put in a larger excess to reduce the premiums. Be careful though as sometimes a bigger excess gives a higher premium (though more often with Motor than non-motor)

Sorry, slightly off topic but I have to ask.

A higher excess can result in a higher premium? That sounds entirely counter-intuitive, what on earth is the reasoning for that?

P.s. I'm not doubting you, and I imagine it's a good reason as insurance is a very statistical thing, but I need to know or I'll be awake all night trying to work it out.

rs65

waxingsatirical wrote: »

We don't have any contents insurance (ring is our only valuable possession) so can't wrap it up with that.

You might not have valuable possessions but everything will add up - what if the house burnt down.

Just buy contents insurance and include the ring.

InsideInsurance

Caladan wrote: »

Sorry, slightly off topic but I have to ask.

A higher excess can result in a higher premium? That sounds entirely counter-intuitive, what on earth is the reasoning for that?

P.s. I'm not doubting you, and I imagine it's a good reason as insurance is a very statistical thing, but I need to know or I'll be awake all night trying to work it out.

Sorry for leaving you awake all night :A

Two reasons:

1) The number of insurers offering £1,000 excess etc is smaller and so you have basic economics that with less competition you have higher prices

2) Negative selection. If you do you statistical analysis you will find that people who are higher risk/ more frequently make claims select higher excess in the belief it will give them a lower premium. That means when you do your loss ratio by segmentation you'll find that you get higher concentrations of high risks with high excesses and so when you get worse loss ratios and so that results in higher premiums.

Its exactly the same reasons why TPO and TPFT is often more expensive than Comp cover

pinkteapot

Contents insurance (including rings) is normally on a new-for-old basis, and you need to insure for the cost of buying the ring new. If you were to insure for 90% of what it cost, you'd have deliberately under-insured and the insurer can potentially refuse to pay the claim at all.

As above, ask the insurer you plan to use whether they want you to insure based on your receipt or a valuation. Most should accept a receipt at the outset - they may have a requirement that you get it valued every year or two after that.

It may well be cheaper (or the same price at least) to take out contents insurance with the ring included, rather than a bespoke jewellery policy. You must have some contents - if you had a fire, tot up the as-new replacement cost of your clothes and other 'stuff' and you might be surprised by what it comes to. Probably a couple of thousand at least.

Before you get quotes, think about what you want covered:

1. Theft - this will be covered as standard on any policy.

2. Loss outside the home - on contents insurance, you'll need to add on 'personal possessions' cover for this as normally you aren't covered outside the home otherwise.

3. Accidental damage - again, on contents insurance this will be an add-on.

Rgbargy

Hi

Your jeweller is likely recommending to insure your ring at a higher price because his price is likely at a discount compared to buying it on the high street. If you lost your ring the insurance company would assess the value on a normal replacement basis.

If you insured your ring for less than the full replacement value then the insurance company will likely reduce the settlement in proportion. They may even void your policy and reject your claim.

We insured my partners £15,000 engagement ring with Highworth Insurance. They were very helpful and quoted both as a single item and on a special home insurance policy. In the end we opted for the stand alone policy as we live in a city centre. It was less than £150. You could probably get yours insured for less than £60 all things being equal.