1 00:00:00,000 --> 00:00:11,360 Welcome to the GuiltTrips podcast. I'm your host, Kendra Lockhart. As a goldsmith and 2 00:00:11,360 --> 00:00:17,560 gemologist, I'll be speaking 24 carat on all things jewelry, metals, and gems. Join 3 00:00:17,560 --> 00:00:24,080 me plus a few friends to demystify both materials and designs as your private jeweler. Let's 4 00:00:24,080 --> 00:00:35,720 tune in on these topics and get golden. One of the conversations regarding jewelry that either I 5 00:00:35,720 --> 00:00:43,560 have to initiate or gets asked of me is about ensuring the ring. In today's talk, we're going 6 00:00:43,560 --> 00:00:51,760 to break down exactly what it is and isn't, how a jewelry policy gets created, what happens when 7 00:00:51,760 --> 00:01:01,120 you need to make a claim, and how the game of jewelry insurance gets played from their end, 8 00:01:01,120 --> 00:01:14,440 a jeweler's experience, and of course, you. The point of this episode is to help you get informed 9 00:01:14,440 --> 00:01:24,880 and have a big picture idea regarding the experience and architecture of insurance so that you can 10 00:01:24,880 --> 00:01:36,600 truly choose if this is something that makes sense on a piece by piece basis. What is jewelry 11 00:01:36,600 --> 00:01:42,720 insurance for? People end up buying policies after they've acquired a piece of jewelry, 12 00:01:42,720 --> 00:01:49,280 whether they had it made, purchased it, or inherited it to protect against three things, 13 00:01:49,280 --> 00:01:59,600 damage of the piece, loss of the piece, or theft of the piece. If all three of those are covered 14 00:01:59,600 --> 00:02:08,360 in a policy, then it is considered comprehensive coverage. Jewelry doesn't need a specialized 15 00:02:08,360 --> 00:02:16,680 policy. Sometimes homeowners and renters insurance will cover it. I'll explain later the pros and 16 00:02:16,680 --> 00:02:26,080 cons of going that route. My stronger experience is with a separate jewelry policy. So how does 17 00:02:26,080 --> 00:02:33,840 one begin with ensuring jewelry? Either you're working with an agent or you're working with a 18 00:02:33,840 --> 00:02:42,840 company. Jewelry insurance for a consumer is different than that for people in the industry. 19 00:02:42,840 --> 00:02:48,920 When I was carrying diamonds, when I was a courier or running people's projects down, 20 00:02:48,920 --> 00:02:57,640 we had what was called block coverage or I was bonded for certain amounts. So an example of 21 00:02:57,640 --> 00:03:04,920 that is I could carry up to $50,000 in diamonds. The block coverage was usually to ensure a store 22 00:03:04,920 --> 00:03:15,240 and had a maximum dollar amount with specifics as far as stop gaps or preventative measures that we 23 00:03:15,240 --> 00:03:21,880 had to take in order to legitimize our claim. Obviously, if there are supposed to be two 24 00:03:21,880 --> 00:03:27,920 employees at all time and only one of us was there during an incident, that's going to void the 25 00:03:27,920 --> 00:03:37,200 coverage. What is needed in order to have a policy created is an appraisal form. That comes from 26 00:03:37,200 --> 00:03:45,000 somebody like me, a gemologist who has done in theory some research on a piece, like I said, 27 00:03:45,000 --> 00:03:53,880 purchased, created or inherited as far as what it would take for retail replacement value. That 28 00:03:53,880 --> 00:04:04,760 means walking into a store and having a duplicate item of similar specs, identical stones, same 29 00:04:04,760 --> 00:04:11,880 metals and materials and techniques and what that would cost. Obviously, sometimes inflation is 30 00:04:11,880 --> 00:04:20,120 part of this. So that's why we tend to encourage people who want jewelry coverage, get your appraisal 31 00:04:20,120 --> 00:04:26,280 looked at every couple of years. If somebody had their ring insured from 20 years ago, that's not 32 00:04:26,280 --> 00:04:33,480 really going to give them a contemporary idea of what it would take to buy the same piece again. 33 00:04:33,480 --> 00:04:38,840 Once there is some sort of documentation by somebody who is an accredited jewelry professional, 34 00:04:38,840 --> 00:04:47,640 that document is then forwarded to either the agent or the company. Those parties are going to 35 00:04:47,640 --> 00:04:55,280 take a look at what the total is, pretend it's $10,000. They're going to calculate a percentage 36 00:04:55,280 --> 00:05:01,400 of that value. And then they're going to use a multiplier in the case of the jewelry insurance 37 00:05:01,400 --> 00:05:11,400 that I use called locational risk factor. Being in Chicago, there's a lot more crime. So my multiplier 38 00:05:11,400 --> 00:05:20,440 is higher than if I was in a more rural area. I have the choice of paying all at once for an 39 00:05:20,440 --> 00:05:27,480 entire year of coverage. We're breaking it down monthly, depending on who the insurer is. Sometimes 40 00:05:27,480 --> 00:05:36,680 I also have choice as far as do I want zero deductible, 5%, 10%, or in situations such as 41 00:05:36,680 --> 00:05:43,000 homeowners insurance or renters insurance, the deductible is a flat dollar amount instead of a 42 00:05:43,000 --> 00:05:54,040 percentage. One thing I like about working with jewelry policies nowadays is that the ring is covered 43 00:05:54,040 --> 00:06:03,080 from the moment of the policy creation. So that means I'm usually having a lot of my clients once 44 00:06:03,080 --> 00:06:08,920 we know that the ring is almost complete, we're getting ready to set a delivery date, I will have 45 00:06:08,920 --> 00:06:15,960 them start their jewelry policy and know that coverage is already active by the time they come 46 00:06:15,960 --> 00:06:23,720 to pick up the ring. So it's protected as they're taking it from my studio back to their home or 47 00:06:23,720 --> 00:06:34,600 safety deposit box or a parent's address for storage situations like these. So what happens 48 00:06:34,600 --> 00:06:41,560 when you need to make a claim? There are two types of claims. To repair the ring. This means 49 00:06:41,560 --> 00:06:50,200 that a stone like an accent diamond has fallen out or the head got crushed or caught on something 50 00:06:50,200 --> 00:06:57,080 and is out of alignment. So what usually happens when a ring is needing repair is that there's a 51 00:06:57,080 --> 00:07:04,200 UCR which is the usual and customary rate. Of course demographics come into it. Insurance 52 00:07:04,200 --> 00:07:11,320 companies take a pooling of low to high price things. They come up with some sort of composite 53 00:07:11,320 --> 00:07:18,120 average on what they believe this repair should cost. Let's say that the stone that's lost is 54 00:07:18,120 --> 00:07:26,440 a two point stone and they've allotted $100 towards this. This means that either that repair is going 55 00:07:26,440 --> 00:07:31,240 to get reimbursed, you'll pay your hundred dollars, you'll pick up your ring, you'll make a claim 56 00:07:31,240 --> 00:07:37,160 and insurance will send you $100 back or they may choose to work with the jeweler directly. 57 00:07:38,040 --> 00:07:45,240 In cases like this it's often incentivized for us to do it for less than that $100 coverage. 58 00:07:45,240 --> 00:07:52,120 How would we do that? Sometimes we've got a stone that's been recycled or has been used in some 59 00:07:52,120 --> 00:07:59,160 other project and pulled out. So that's kind of a cost saver. Perhaps we let the junior jeweler 60 00:07:59,160 --> 00:08:07,000 work on the project at a lower labor rate than somebody with advanced skills. If the repair price 61 00:08:07,000 --> 00:08:14,280 exceeds the coverage then that's out of pocket. You're paying the difference or you're going to a 62 00:08:14,280 --> 00:08:21,640 jeweler who's in part of the network. One of the reasons I didn't love jewelry insurance with 63 00:08:21,640 --> 00:08:28,040 homeowners and renters policies such as state farm is they have a list of jewelers they want you to 64 00:08:28,040 --> 00:08:34,760 go to a network. Back in the day you would get approached by a state farm agent and asked if 65 00:08:34,760 --> 00:08:40,840 you wanted to be part of the network. They would say we're going to send you this type of client 66 00:08:40,840 --> 00:08:47,880 and it'll help you build your client base. Spoiler alert the people coming in to have their ring 67 00:08:48,440 --> 00:08:56,760 repaired are extremely unlikely to want to patronize your store or begin buying your creations. 68 00:08:57,480 --> 00:09:03,320 Not that it's impossible but they're there for very very transactional restoration of something 69 00:09:03,320 --> 00:09:10,520 they've already put a lot of money into. The beauty of having jewelry insurance is it saves you the 70 00:09:10,520 --> 00:09:18,360 doing it yourself of having to figure out where to go, how to get the materials, the negotiating 71 00:09:18,360 --> 00:09:25,640 of what needs to be done as somebody who may not be educated about the process, and it is a third 72 00:09:25,640 --> 00:09:34,120 party. The insurance is going to monitor not just your claim but how the jeweler is executing the 73 00:09:34,120 --> 00:09:41,480 repair. So for a lot of people like most service-based industries there is a convenience factor, 74 00:09:41,480 --> 00:09:44,920 there's an ease of life factor, and there's a peace of mind factor. 75 00:09:49,160 --> 00:09:55,160 Now let's get into the other type of claim loss or theft. Let's say that the ring is extremely 76 00:09:55,160 --> 00:10:00,200 damaged. In real life example a client's ring slipped and fell down the garbage disposal 77 00:10:00,200 --> 00:10:06,680 and it absolutely destroyed the mounting. She was able to get the stone back or theft. 78 00:10:08,200 --> 00:10:14,840 Your contractor came in, you stepped away for a moment, they pocketed your engagement set, 79 00:10:15,560 --> 00:10:22,120 you weren't paying attention, and now it's too late. There are two ways that can go when you 80 00:10:22,120 --> 00:10:30,520 make that claim. Do you want to have it cashed out and just say I'm fine without a ring or do 81 00:10:30,520 --> 00:10:37,000 you want them to replace what you've had? Should you choose replacement? Several policies will work 82 00:10:37,000 --> 00:10:44,520 with jewelers to find a stone that is as identical or nearly identical to what you had. Let's say 83 00:10:44,520 --> 00:10:52,440 you had a one carat diamond that was around cut and it was H color and it was VS2 clarity, 84 00:10:53,240 --> 00:10:58,920 they're going to look for that stone. One of the challenges is if you had an extremely well cut 85 00:10:58,920 --> 00:11:06,280 stone but it wasn't certified, there's no lab saying so. As long as they get a one carat round 86 00:11:06,280 --> 00:11:14,920 H VS2, they've contractually done their part to replace what you had as a center stone given 87 00:11:15,640 --> 00:11:23,560 the majority of specs. If a mounting like the previous example is damaged beyond repair, 88 00:11:23,560 --> 00:11:31,240 then a new one must be made. This is often a mutual decision with communication between the 89 00:11:31,240 --> 00:11:40,200 insurer and the jeweler as far as what constitutes it being quote unquote totaled out. Can it be 90 00:11:40,200 --> 00:11:46,280 salvaged and repaired and still be structurally sound enough to be worn with a peace of mind for 91 00:11:46,280 --> 00:11:54,120 the next five years? If not, jewelers are going to discourage that which does not rule out insurance 92 00:11:54,120 --> 00:12:01,160 companies saying, hmm, we're not interested in paying for a brand new ring. We still believe that 93 00:12:01,160 --> 00:12:13,160 this one can be reworked, restored and continued to be used. So one of the stories from the world 94 00:12:13,160 --> 00:12:20,120 of insurance through the eyes of a goldsmith like me is the financial tipping point. If you've 95 00:12:20,120 --> 00:12:26,200 insured your ring year after year after year after year, and you've been diligent and you've kept it 96 00:12:26,760 --> 00:12:32,920 in great condition, you're never going to get to the point where your insurance is as expensive 97 00:12:32,920 --> 00:12:39,160 as the ring. That's one of the major fears that I deal with with clients. What if I end up buying 98 00:12:39,160 --> 00:12:47,960 a second ring just an insurance loan? Let's pretend the ring is $10,000. Your insurance policy per 99 00:12:47,960 --> 00:12:54,520 year annually is $300. It's going to take 33 years for you to get back up to the original purchase 100 00:12:54,520 --> 00:13:00,440 price. One of the things that insurance companies do have the right is right of refusal. There are 101 00:13:00,440 --> 00:13:08,120 certain items that are uninsurable because they are too complicated or too rare to put in a policy. 102 00:13:08,760 --> 00:13:14,200 One of my clients found a red diamond and had it made into a single stud earring. 103 00:13:14,200 --> 00:13:22,120 The ability for an insurance company to locate even internationally or worldwide, 104 00:13:22,920 --> 00:13:29,400 another three-quarter carat red diamond, is so rare I haven't even seen one in museums. 105 00:13:29,960 --> 00:13:33,000 It was refused as far as coverage. 106 00:13:33,000 --> 00:13:44,760 Insurance will not help you with any sort of manufacturing defects. So if there was a faulty 107 00:13:44,760 --> 00:13:52,360 join on the ring from a jeweler's torch, that's on the original makers. If the casting had a lot 108 00:13:52,360 --> 00:13:59,800 of porosity and ended up cracking or breaking, again, that goes back to the primary source 109 00:13:59,800 --> 00:14:06,120 of the ring. Insurance will not help with that. So it's important to understand that this isn't 110 00:14:06,760 --> 00:14:13,320 universal and they're not just going to be the genie in the lamp, you know, call them up and 111 00:14:13,320 --> 00:14:20,360 they'll just fix everything. There are a couple different ways that the financials go when it 112 00:14:20,360 --> 00:14:28,120 comes time to replace an entire ring. There's the actual cash value, which is fair market. 113 00:14:28,120 --> 00:14:33,240 There's replacement cost and we've used the word retail, which is obviously a very different 114 00:14:33,240 --> 00:14:41,320 pricing system. And then there's an agreed value. Sometimes you get paid out and sometimes the 115 00:14:41,320 --> 00:14:51,480 jeweler gets paid out as we've discussed. The final element worth discussing is the responsibility 116 00:14:51,480 --> 00:14:58,120 of the ring owner if there is a theft. It is strongly encouraged that a police report gets 117 00:14:58,120 --> 00:15:06,760 filled out. It legitimizes the claim and it also brings compliance into the situation. Now what 118 00:15:06,760 --> 00:15:13,480 does that mean? It means that the police are going to take the report and run it through databases. 119 00:15:13,480 --> 00:15:22,760 Compliance is where anybody who acquires a diamond in the secondary market, such as a pawn shop, 120 00:15:22,760 --> 00:15:32,440 a consignment company, a jeweler who buys over the counter, you have to hold the item for x number 121 00:15:32,440 --> 00:15:40,200 of days for any report of it missing to match up. Now how often is stolen jewelry recovered? 122 00:15:40,200 --> 00:15:47,480 Sadly, there's a 2% recovery rate. However, within that 2%, compliance does what it's supposed to do. 123 00:15:48,840 --> 00:15:55,800 I had a colleague who bought a three carat diamond 10 years ago over the counter. Someone came in 124 00:15:56,440 --> 00:16:03,480 and said, I want to sell this. They agreed on a price that was attractive to both the jewelry store 125 00:16:03,480 --> 00:16:11,160 and to the seller. Within a week, the police came and confiscated that diamond purchase. 126 00:16:11,800 --> 00:16:20,120 It had been reported stolen and there was absolutely no recourse whatsoever. She was out the $17,000 127 00:16:20,120 --> 00:16:27,320 that she paid for it. And this could have been avoided if, one, it was taken on consignment 128 00:16:27,320 --> 00:16:33,640 and said as soon as it clears database, we'll pay you out. Just leave it with us for the two weeks 129 00:16:33,640 --> 00:16:41,480 that it might take. Or if there was a time, like now, that you can run those numbers and get an 130 00:16:41,480 --> 00:16:48,600 answer within minutes instead of weeks. So obviously, advancements have been made and when this did 131 00:16:48,600 --> 00:16:54,840 happen, that wasn't the case. It wasn't a possibility to get that information in real time. 132 00:16:54,840 --> 00:17:03,160 It is not mandatory to ensure your jewelry. And there are plenty of people from all walks of 133 00:17:03,160 --> 00:17:10,360 socioeconomics who choose to avoid covering their pieces, whether it is because it's perceived as 134 00:17:10,360 --> 00:17:15,000 an unnecessary expense or it's not in the budget. Or privacy is also a factor. 135 00:17:15,000 --> 00:17:26,520 There are people who just don't like the idea of insurance companies knowing what assets they do or don't have. 136 00:17:26,520 --> 00:17:35,320 So to wrap up, is this protection? In many cases, that's true. Is this all 137 00:17:35,320 --> 00:17:43,720 so for profit? It certainly is that way when it comes to having your items covered for repair, 138 00:17:43,720 --> 00:17:51,400 even though the offset is convenience, time saving, peace of mind, and being referred to a local 139 00:17:51,400 --> 00:17:59,400 specialist, as well as the money that gets saved, the money that is saved, the money that is saved, 140 00:17:59,400 --> 00:18:06,840 and being referred to a local specialist, as well as the money that gets saved and made if 141 00:18:06,840 --> 00:18:15,720 lesser quality diamonds are used to replace a loss claim or if a mounting is salvaged versus remade. 142 00:18:20,200 --> 00:18:25,560 This is the extent of my expertise on helping guide my clients as far as which decisions to make 143 00:18:25,560 --> 00:18:35,000 regarding their personal pieces. Thank you for listening and learning with me. 144 00:18:35,640 --> 00:18:39,880 I would love you to share this project with people finding rare beauty in today's world 145 00:18:39,880 --> 00:18:56,360 and throughout our times. Until the next episode, keep your own stories sparkling.