Which Diamond Insurance policy?...

The three main types of diamond insurance are:
• Actual cash value policy • Replacement value policy • Agreed value policy
Under the actual cash value type of diamond insurance policy the diamond insured would be replaced, on the occasion of loss or theft, using the following equation:
Current cost to replace the diamond LESS depreciation
Replacement is the most common type of diamond insurance policy chosen by those insuring their valued gems. Insurance appraisal of diamonds is undertaken in one of two ways.

In the first instance, the insurance company will impose a limit on the diamond value sum, regardless of other factors, that the insurance company would be obliged 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 actual amount that will be paid per premium will vary according to the location; for instance insured individuals in high crime areas are more likely to make claims, so amount paid pro rata per premium will be less than in a more secure/low crime area.

Insurance cash Value - Shocker!

The insurance companies, themselves, profit from the fact that they will usually be able to find replacement diamonds for a much lower price than the customer originally paid for the diamond. For example, a diamond may have cost you $30,000 but could well be replaced by a diamond closely matching the description of the original gem that will cost the Insurance company only, say, a third of this price. This large disparity arises because diamond insurance companies can buy diamonds direct from manufacturers - the point of supply to the jewelry makers/dealers. (Which indicates the considerable profits to be made in turning a gem into the feature of a jewelry item.)

Although possibly more economical this example highlights why 'cash payout' diamond insurance policies are less popular - for if you did lose a diamond that cost you $30k you would only get an actual cash settlement of $9,000 or $10,000 this being the purchase price of a similar diamond as valued by the insurance company. (Ouch!)

'Agreed Value' may be the best way to go...

Some of the larger diamond insurance companies do offer agreed value insurance for diamonds. For example, agreed value diamond insurance policies offered by Atlantic and CHUBB would pay out the agreed value of the diamond, (patently, their own valuers will agree a sensible price for the diamond much closer to the owner's purchase price, but not 'over valued').

Not all diamond insurance policies are equal, so be sure to read everything appertaining to the policy clauses prior to agreement. Most insurance companies will do only what is minimally required according to requirements in law. We all hope we never need to use insurance, and of all policies diamond insurance in particular is one we would hope never to claim on, as it will often mean the loss of something of irreplaceable sentimental value! So taking the time to read and research the policies you are considering can save additional headaches if ever a claim must be lodged.

So, how much will you have to insure your diamonds for? - Well it will all depend on the value of the stone/s, and that in turn will depend on the FOUR C's! To study these factors in more details please visit our articles relating to - Color; Clarity; Carats and Cut.