Insure your personal items

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Q: I've heard there are insurance policies that I can buy for my new engagement ring, digital camera or golf clubs that might not be covered by other insurance I hold. When is it a good idea to get one of these policies?

A: The young and newly engaged sometimes look down at their ring fingers and see the most valuable thing they own. Insurers say this leads many to the next thought, which is, what would I do if I lost it?

"You get engaged, and you get this expensive item, then you start thinking about getting a better apartment together or buying a house down the road, and it starts to trigger that insurance discussion," said Jeanne Salvatore, a spokeswoman at the Insurance Information Institute, an industry group.

That thinking leads many to buy personal article policies, otherwise known as floater policies, that insure anything from diamond rings to digital cameras, artwork and musical instruments. They have the option of buying the policies as add-on coverage to their homeowners or renters insurance or as stand-alone policies.

State Farm spokesman Kip Diggs said 70 percent of floaters are bought to cover jewelry, and one of the fastest-growing areas of floater policies is for jewelry pieces that cost $25,000 and more.

More often, though, consumers are buying policies to cover their treasured rings, necklaces and earrings that cost more than $1,000 or $2,000, prices that can put them above the range of what is covered in their standard homeowner or renters policies.

Mike Maley, a vice president at Jewelers Mutual Insurance Co., said separate policies to cover jewelry cost between 1 and 3 percent of the value of the item. And the size of the market is potentially big, Mr. Maley said, noting that Americans spent $63 billion on jewelry and watches in 2007.

Besides $25,000-plus jewelry, a growing area for floater insurance is computers, State Farms' Mr. Diggs said. That has doubled in the past five years, with about 81,700 add-on or standalone policies in place at the end of 2007.

Among the 2 million floater policies State Farm has sold, Mr. Diggs said people also buy coverage for things like pianos, paintings and postage stamps.

Most insurers offer two options. One type of policy pays what the item would be worth when it was lost, assuming some depreciation in value, while replacement policies pay the cost of replacing the item.

Mr. Maley said consumers must settle on their personal cost threshold, and decide whether they want a policy, based on their own risk tolerance, where they live and other factors. One thing is consistent, Mr. Maley said, and that is the reason for the majority of claims. Most are attributed to accidental loss, or what insurers refer to as "mysterious disappearance."

"They left it on top of the soap dispenser at the airport, and it went down the drain," Mr. Maley said of engagement rings. "Somewhere out there, there's a lot of lost jewelry."


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