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Protecting Your Diamond-Encrusted Rolex

detail of hand removing one luxury watch from a case with several watches.

Many of us are familiar with the sinking feeling of realizing we’ve left something behind after checking out of a hotel. But rapper Meek Mill recently took the sensation to a new level.

Meek Mill, whose legal name is Robert Rihmeek Williams, recently shared his close call on Instagram. He left three watches (a Richard Mille RM 11-03 Rose Gold, a diamond-encrusted Audemars Piguet and a diamond-encrusted Rolex), all clearly high-end timepieces collectively worth hundreds of thousands of dollars, in a hotel room and failed to notice for five days. Luckily when he contacted the property, the hotel found the watches still in his room. “I need insurance like now,” Meek Mill added, with a string of grinning face emoji with beads of nervous sweat.

Meek Mill has a history of expensive taste in watches. TMZ reported in 2016 that he spent $68,000 on a Rolex from Josef Roth, better known as “Joe the Jeweler” and the founder of Shyne Jewelers in Philadelphia. Joe’s professional Instagram shows him posing with a variety of celebrities and also includes images of celebrities wearing his work. Musicians and athletes often frequent jewelers like Joe who are, themselves, celebrities, including Greg Yuna (“Mr. Flawless”), Jacob Arabo (“Jacob the Jeweler”) and Chiokva Sam (“A$AP Eva”).

I wonder whether customers like Meek Mill are hearing that they should take out insurance when they buy pieces from these jewelers. Whether Meek Mill got such advice and ignored it or never got it at all, his Instagram observation wasn’t wrong. If you choose to collect such expensive items, it’s smart to protect them.

Some of the ways to protect your jewelry are common sense but easy to overlook. For example, never put expensive jewelry in checked luggage when you travel, and only take items with you that you actually plan to wear at your destination. If your performance style involves jumping into the crowd or other activities that represent rough treatment for what you’re wearing, consider saving expensive items – especially delicate ones – for situations where they are less likely to get banged, pulled off or otherwise damaged. And while it is tempting to brag about every new purchase on social media, the more you do so, the more you make yourself a target for enterprising thieves.

Even if you are careful, though, bad things can happen. This is where insurance comes in.

There are two main ways to insure high-end jewelry. The first, and most common, is in conjunction with a homeowners or renters policy – and if you haven’t already insured your home, doing so is a good idea regardless of how you decide to insure your jewelry. Most homeowners policies offer some coverage for jewelry, but only up to a certain amount; the Insurance Information Institute notes that this limit is often around $1,500. Protection included in a standard home insurance policy usually does not cover accidental damage and often does not cover accidental loss, though the particulars vary.

Assuming that the included protection is not enough for your valuables, most insurers allow you to add on some form of coverage to your existing policy. This may be called an “endorsement,” which is an amendment to your original policy; a “rider,” which is a provision that adds to a policy’s existing coverage or terms; or a “scheduled floater,” a type of insurance policy that covers specific items of easily movable property. Blanket, or nonscheduled, coverage is often also available. The exact terminology and specifics will depend on your insurer.

Add-on jewelry insurance typically allows for higher coverage limits than those included in standard policies. It also extends the coverage to more circumstances, such as accidental loss. These adds-ons typically do not involve a deductible. The cost will depend on the specifics of what you are insuring.

A few companies offer stand-alone jewelry insurance. These policies are sometimes more comprehensive and customizable than other options, though generally they still do not cover standard wear and tear. The cost of stand-alone jewelry insurance varies by location, but a rule of thumb is that you can expect to pay 1 to 2 percent of the item’s value annually in premiums. Stand-alone jewelry policies also allow you to uncouple jewelry insurance from your homeowners policy, which means that if you file a jewelry claim, it is less likely that doing so will affect your home insurance premium.

If you decide to purchase insurance from a stand-alone insurer, don’t forget to consider the company’s ability to pay claims. Whether you’re buying life insurance, homeowners insurance or jewelry insurance, you want to have confidence that the insurance company has the financial strength to honor its policy commitments whenever claims are filed. When considering new insurance, you should seek out companies that carry a rating of at least A+ from A.M. Best and that also carry ratings no lower than AA- from S&P and Aa3 from Moody’s. After all, an insurance policy is worth no more than the company behind it. You should also research the insurance company’s reputation for paying claims. Even though the company may have financial means to pay, some insurers have a reputation for unfairly denying or delaying payment of claims.

As with any insurance coverage, it pays to shop around. You should not only compare the price of jewelry insurance and add-ons to your existing policy, but also be sure you fully understand the specifics of a proposed policy in advance. Many policies cover “repair and replacement,” but you should dig deeper. Is accidental loss covered? “Mysterious disappearance,” an insurance term for an incident when it is not clear whether the piece was lost or stolen, is a common reason for jewelry claims; you will want to know in advance whether it is covered under your policy. Is there any sort of perceived reckless behavior on your part that could make it hard to collect a claim? Does the coverage change when you – and your jewelry – are outside your home? And can you choose your own jeweler for replacement or repair, or does your policy limit you to certain vendors?

You should also determine whether the policy pays out the item’s actual cash value or the amount it would cost to replace the item. Actual cash value factors in depreciation, while replacement cost is generally the amount it would take to buy the item again (subject to any limits in the policy). The latter is generally more expensive than the former, but since jewelry doesn’t necessarily depreciate the way a car or other valuables would, the main factor causing depreciation is the level of wear and tear. If any of the jewelry you want to insure is custom-made, you should also determine whether the policy covers the cost of a true replacement or only that of a “comparable” piece.

All of this underscores the importance of documenting your jewelry’s value through purchase receipts, appraisals or both. Some riders and scheduled floaters require a professional appraisal, but even if the insurer does not require it, having your jewelry appraised is a good way to support your case if you and the insurer disagree about how much an item is worth. It is a good idea to get valuable jewelry appraised as soon as possible after you purchase the item. You should also have your jewelry reappraised every few years to determine if you need to increase your insurance coverage. Keep paper and digital copies of your receipt and appraisal documents; it’s a good idea to photograph the insured items, too.

Meek Mill was very lucky to be reunited with his missing watches, but his close call shines a light on a sometimes-overlooked area of insurance. If you value your jewelry collection, it is important to take the time to protect it properly against theft, natural disasters or even your own absent-mindedness.

Executive Vice President and Chief Operating Officer Shomari D. Hearn, based in our Fort Lauderdale, Florida headquarters, is among the authors of The High Achiever’s Guide To Wealth. He contribued to Chapter 12, “What Estate Planning Documents Do I Need?" and to Chapter 17, "Living And Working Abroad." He also contributed several chapters to the firm’s book for adults age 55 and older, Looking Ahead: Life, Family, Wealth and Business After 55.

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