Insuring a diamond takes a bit of thought, planning, and shopping around. Diamond insurance isn’t like purchasing car insurance. It is quite different. Depending on the state that you live in, there are basically three different types of policies that will cover diamonds, and all insurance policies that cover diamonds are considered Marine type policies.
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The first type of insurance policies for diamonds is an Actual Cash Value policy. If the diamond is lost or damaged beyond repair, the insurance company will replace the diamond pursuant to current market values, no matter how much you originally paid for the diamond. This type of insurance policy for diamonds is actually not that common.
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The most common type of insurance for diamonds is Replacement Value insurance. The insurance company will only pay up to a fixed amount to replace the diamond that was lost or damaged beyond repair. This does not mean that they will pay that amount – it means that they will pay up to that amount. In most cases, the diamond can be replaced at a lower cost.
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The third type of insurance coverage offered for diamonds is Agreed Value. This is sometimes called ‘Valued At.’ This type of coverage is very rare. In the event that a diamond is lost or damaged beyond repair, the insurance company simply pays you the
amount that you and the company agreed upon. This is the best type of insurance to have, but it is rarely offered. If you can’t get Agreed Value coverage, Actual Cash Value coverage should be your next choice.
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Your rates will be determined by the value of the diamond, the type of coverage that you select, and the area that you live in. If you live in an area with a high crime rate, you can expect to pay more for your diamond insurance coverage. It is important to remember that insurance agents are not qualified jewelers, and jewelers are not qualified insurance agents. It is best to get a certificate for your diamond, and to provide the insurance company with a copy of that certificate. This leaves the insurance company less room for arguments over the actual value of the diamond.
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It is important to note that separate coverage should not solely be relied upon to cover your diamond, but rather it should also be covered under your homeowner's insurance such that if it is stolen from your home, for example, your home owner’s insurance policy will provide coverage pursuant to the policy terms. Since the diamond may not always be in your home, once it leaves your home, the separate "diamond insurance" coverage should kick in.