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Pros and Cons of Insuring High-Value Items

Birthday and anniversary gifts, gifts through inheritance, and special purchases you may have made during travel or to celebrate some good fortune add up over the years. Before you realize it you may have a considerable amount of high-value items in your home that may not be covered by standard homeowner’s insurance. Some homeowner’s policies include coverage for jewelry and other precious items such as watches and furs. These items are often covered for “all perils” losses caused by fire, windstorm, theft and vandalism. However, there may be special limits of liability, meaning that the full value may not be covered by the policy.

Theft of jewelry is an example. To keep coverage affordable, since jewelry can be easily stolen, the standard policy has a relatively low limit of liability for theft, generally $1,500. Valuable jewelry or other items difficult to replace can have increased coverage by raising the limit of liability or “scheduling” your individual pieces through the purchase of “floater” policies. Raising the limit of liability is the cheapest option; however, there may be a limit on the amount you can claim for the loss of any individual piece, say $2,000, when the overall limit is $5,000. Scheduling each piece or item may cost more in premiums, but it offers broader protection because the floater covers losses of any type, including accidental losses such as dropping a ring down a sink drain or leaving an expensive watch in a hotel room. However, to obtain a policy floater, the items covered must be professionally appraised. The cost of this service varies depending on where you live.

If you’re thinking your standard home insurance policy isn’t enough, you’re likely right. So the pros of additional coverage are peace of mind and the comfort of knowing that a valuable item lost or stolen can be financially recovered, even if not replaced. The cons are really two: an appraisal of each covered item and the recurring annual policy expense you’ll pay in addition to your standard homeowner’s policy premium.