Losing your diamond ring to damage or theft can be heartbreaking because of the sentimental value, but replacing it can also be a serious financial burden if it’s not properly insured.
Can lab grown diamonds be insured? Lab grown diamond rings can be insured. Some advocates for mined diamonds claim that lab versions are hard to get coverage for, but in reality, the application process, likelihood of acceptance , policy terms, and proportional costs are identical to what you would experience for an earth grown diamond.
Where can you get a policy? Which coverage is best? How much do they cost? Keep reading! We’ll cover all those questions and many others below.
The Purpose of Insurance
Imagine picking your ring up off a tile floor after it just slipped out of your hands. You examine it and quickly realize that the diamond is cracked. You would likely feel two kinds of loss. First, you feel deep sadness because of the sentimental value that the diamond held. Second, you have a sickening realization of what it’s going to cost to replace the now broken diamond.
If this just happened to you, would you be able to come up with the money needed to replace your diamond? Would it require major sacrifice for your family, or just be a minor inconvenience?
Often, when a sad situation like this occurs, the funds aren’t available to immediately replace the damaged diamond, so they have to borrow money, go without a ring for a while, or wear an inexpensive replacement until they can afford to get the ring fixed.
Insurance can help with the financial side of a loss like this. If you have coverage for your ring, you could file a claim, and collect enough money from the policy for the loss to help you replace it right away, without putting a big burden on your family’s finances.
You’ve probably heard about how famously hard diamonds are. That hardness helps them to resist scratching, but it doesn’t make them indestructible.
My sister’s diamond hit her tile floor several years ago and cracked. She couldn’t afford to replace the diamond on her own at the time, but fortunately, she had an insurance policy on the ring. The insurance company removed the financial burden from my sister, by ultimately giving her the value of her ring, in cash.
In addition to the risk of breaking or chipping, diamonds can get lost or stolen.
This past Sunday, a neighbor told me about a time, years ago, when he was walking through the LAX (Los Angeles) airport, on his way to a connecting flight. His eyes looked down toward the floor for a moment as he walked, and something on the floor ahead caught his attention. He bent down and found a diamond on the floor. He said is was more than 1 carat, and had apparently just slipped out of its setting. Imagine how sick the poor woman that lost it must have felt when she looked at her ring and realized that her diamond was missing (probably somewhere in LAX).
My wife’s diamond ring was stolen from our home, while a window replacement company was switching out windows in our home years ago. She had been working around the house that day, so she wasn’t wearing it while the workers were there. When later went to put it on, she found it was missing. We didn’t have insurance on the ring, and it would have hurt us financially at the time to have to replace it with something similar. Fortunately, we were able to get the diamond ring back. We confronted the owner of the company, and the owner confronted his installers. Fortunately one of those employees came clean and coughed up the ring. We didn’t have insurance on the ring, so heartbreak would have been compounded by a sense of real financial loss at the time.
Insurance is there to help protect us against losses that we can’t afford to absorb, or those that we don’t want to have to absorb in a worst case scenario. By paying a reasonable premium each month, we can avoid a bit lump sum financial hit. We need insurance against catastrophic health problems, but don’t need insurance on a compact disk purchase. If a new CD gets scratched, I’ll just buy a new copy. Similarly, I might need insurance on a $2,200 diamond ring, but wouldn’t bother if I purchased an $80 Cubic Zirconia ring (unless the band was made of precious metals that made it quite expensive.
If you want to protect yourself from the financial impact of a damaged or stolen diamond ring that needs to be replaced, you essentially have two options.
- Jewelry Insurance (of some sort)
You can get a limited amount of coverage through your existing homeowners, or renters, policy. Typically, those will max out at $1,000 to $1,500. That’s better than nothing, but it would still leave you with a loss on many diamond rings.
If you need a higher coverage amount, you’ll want to get a specific jewelry rider (or endorsement). Again, quality coverage is easy to obtain for both earth grown diamonds and lab grown diamonds.
The coverage process typically starts with a jewelry appraisal to determine value. You don’t always have to have one done, but it’s a good idea for both parties. If you estimate the value of the ring too high, you’ll pay higher premiums than you need to (no sense in that). If it’s too low, you may not end up with enough coverage to cover the cost of a replacement ring.
A second approach could be comparison shopping. Once you find several rings that seem to be extremely similar to yours, you can average their costs to get a reasonable replacement value that you can base your coverage level on. This method is inexpensive and fast, but can be a lot less accurate. A formal appraisal provides confidence to potential future buyers, it’s also the value estimate that will most effectively factor in the value of the unique characteristics of your particular gem.
Self insurance means that you’re prepared for cover the financial impact of a worst case scenario. I doubt that Melinda Gates (wife of Bill Gates) would bother with insurance for most small jewelry items. If she even owns a $3,000 ring, insuring it would be a waste of time and money, because they can easily spend another $3,000 if the ring is lost or damaged, without giving it a second thought.
You don’t have to be Bill or Melinda Gates in order to self insure your ring. You really just have to be able to cover the financial impact of loss or damage, without having it feel like a serious financial crisis. What if you put $3,000 into a Certificate of Deposit. That money is specifically set aside as ring insurance. If you lose or damage your ring, you can pull the money out to repair or replace the ring without causing any real financial impact, because the money is already set aside. If you never lose or damage your ring (a likely scenario), you can eventually pull that money out and use it for something else. If you have the money available, you’ll save money with an approach like this.
If you don’t have $3,000 laying around, you can still pursue the same path, by setting aside some money each month, call it $200/year ($16.44/mo for example). That money (and the interest it draws), builds over time, until you have several thousand dollars available eventually. If you like the sound of contributing to savings over time, you may want to give some thought to what you’ll do in the short term if a problem should arise with your ring before you’ve built up significant savings. You really should have a back up plan before beginning to self insure this way.
Think about it, there are three common scenarios that could take place. Thinking through each one, can help you determine the best way to protect your lab diamond. For each of the examples that follow, imagine that we’re talking about protecting a $3,000 ring that could insure for $60/year.
Imagine that you damage your lab grown diamond engagement ring in 12 years. If you had insurance coverage, you would have paid $720 in premiums, but, the good news, is that you get a new diamond (you saved more than $2,200).
On the other hand, imagine that you damage the ring in 12 years, and don’t have insurance. You’ve saved $720 worth of premiums through the years, but replacing the ring could potentially run more than $3,000 (depending on where prices for lab grown diamonds are at that point). You could be out more than $2,200 (above and beyond what you would have otherwise paid for insurance).
One final scenario—imagine that you never lose or damage your ring, and you end up wearing it for 40 years. Damage-free diamond ownership over multiple decades is a pretty common experience. You would end up saving $2,400 in total, over that period of time (assuming rates stay constant). Assuming that you invest that extra money through the years, the total savings, with interest, over four decades could be much more significant!
Recognizing both the opportunity and risk, you need to decide whether it’s better for you to insure your ring for peace of mind, or save some money for a rainy day and self-insure.
Don’t Believe the Misinformation
I’ve unfortunately seen misleading information online, that claims lab cultured diamonds are difficult, or impossible, to insure. Maybe you’ve seen similar comments. That’s simply not true—but don’t take my word for it, call your insurance agent and tell him that you’d like to insure your lab grown diamond ring. You’ll find that they view it the exact same way they view a mined diamond ring. They aren’t harder or more expensive to insure.
Why are insurance companies happy to ensure man made diamond rings? Accepting a fair premium in order to insure an asset with real value, is what insurance companies love to do! Lab created diamonds are diamonds in every sense of the word—they just have different origins. They’re just as hard, durable, and beautiful as an earth mined version. In fact, they’re visually indistinguishable. Even more importantly, they’re being insured for an amount that’s in line with their actual value.
The Cost of Good Coverage
Jewelry insurance is priced based on the total insured value of the item. It will generally run 1% to 2% of the total insured amount ($1 – $2 per $100 of insured value) as an annual premium. For example, a $3,000 ring would cost roughly $30 to $60 per year (or $2.50 to $5.00 per month) to insure.
You may be able to decrease your insurance premiums by using a safe to store your ring when it’s not being worn. You can also keep important documentation, like receipts and grading reports in the safe if you’d like. Ask your insurer if they offer this type of discount, or any others.
If you ultimately decide to get coverage, do it as soon as possible. It would be sad to damage your ring before you policy goes into effect. You can’t legally,or ethically, get coverage on a ring that’s already damaged. If you have active hobbies where your ring could potentially get damaged, and you don’t like the thought of taking it off and leaving it behind, you should seriously consider getting coverage. It’s really inexpensive, and could provide a lot of peace of mind.
Policy cost isn’t the only important factor to consider. Here are some additional items that need consideration:
- The type of solution offered by the policy
- REPLACEMENT VALUE: Insurance pays the actual amount required to replace the item with a ‘similar’ new item.
- AGREED VALUE: Insurance pays a flat contracted amount (which may be higher or lower than the present actual value).
- ACTUAL CASH VALUE (ACV): Insurance pays what the ring is currently worth, minus depreciation.
- Whether there’s a deductible (and how much?).
- What the exclusions are (loss, theft, loss of stone only, etc).
- What forms of damage are covered? Which kinds aren’t covered?
- How does the policy address the issue of inflation?
- What kind of proof, or evidence, they’ll need if the ring is stolen, or lost, at some point.
- Ease of working with the insurance company (responsiveness, speed of processing, etc).
- If there are restrictions on where you can take your ring for repair
- Whether you’re excluded from doing specific types of alterations.
- Are there geographic limitations to coverage (i.e. no coverage when traveling abroad)?
Simply calling and asking insurers about these issues will help you to find someone that has the right combination of price and features. Online reviews can also help you to get more comfortable with the quality of a particular insurer than you may be considering.
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Choosing the Right Policy Type
Insurance is almost never a one size fits all proposition. Individuals like different types of policies for different reasons. Here’s a little more information on the policy types that are most common.
- Replacement Value:
Pros: The goal of jewelry insurance, is to make you whole again following a loss—not to MAKE lose profitable. Replacement Value insurance, helps ensure that you’ll be able to replace your lost or damaged ring.
Cons: You may not fully agree regarding how alike the insurance company’s ‘similar’ ring actually is.
2. Agreed Value:
Pros: There’s certainty regarding the amount that the insurance company will pay for a covered loss.
Cons: If the value of lab made diamonds rises rapidly, the contracted value on the policy may not be enough to cover replacement.
3. Actual Cash Value:
Pros: This policy is the one insurance companies often prefer to sell. It may be cheapest and easiest to obtain.
Cons: Every year that you own your ring, the payout value of your insurance policy will get lower, because the depreciation percentage will continually grow higher.
In general, Replacement Value policies tend to provide the best benefit. Having said that, please be sure to read all contract language regarding exclusions before committing to a given policy long-term.
Review and Update Your Policy Regularly
Insurance isn’t something you set up once, create automatic payments for, and then never have to think about again. You’ll want to confirm the value of your ring at least every 3 to 5 years. If prices have gone up, you may need to increase the amount of coverage you have for the ring. Your overall annual costs will go up as you raise the amount that the ring is insured for, but not by much.
On the other hand, if the average retail value of man made diamond rings like yours goes down in value, you won’t need as much coverage in order to replace the ring, so you can decrease the amount of your coverage to more accurately reflect the true replacement value. Adjusting downward will save you a little money going forward.
If you’d like, you can certainly have your ring appraised every few years to confirm its value, but that’s probably not necessary. The cost of regular appraisals would add up over the years, so getting online to find ‘comps’ (comparable lab grown diamond rings) that are very similar to your ring, should be sufficient for getting a good ballpark feel for present value.
Finally, you’ll want to learn about any warranty offered from the retailer that you purchased your ring through. Be cautious, store warranties sound nice on the surface, but they’re typically worth very little in reality. They generally have exclusions and serious limitations that make them difficult to use. Most commonly, long term store warranties only really cover manufacturer defects, which isn’t very valuable coverage. If you have a warranty like that on your ring, I’d suggest that you get actual insurance coverage for the ring anyway, if you can afford to.
How to Protect your Ring
It’s a good idea to have your diamond graded by one of the major labs like GIA (Gemological Institute of America) or IGI (International Gemological Institute), if that hasn’t already been done. Those labs provide you with a report that describes your diamond in great detail. That detail helps ensure that you don’t get short changed, if you ever have to file a claim with your insurance provider.
A grading report from GIA for lab grown diamonds, won’t be exactly like their reports for mined diamonds. They address fewer details related to color in those reports. For that simple reason, an IGI report might be more valuable. It prepares grading reports for lab grown diamonds that are identical to the reports they prepare for mined diamonds.
As additional precautions, keep a record of any work done on the ring (repairs, adjustments, and enhancements). Take pictures of the ring that clearly show every detail of the ring, and keep them in a safe place in case of future loss or damage. That will help the insurance company to verify that your policy limits are reasonable. It will also provide pictures you can provide to the police if your ring is ever stolen.
You can also consider having a micro inscription lasered onto the girdle (the outer perimeter) of your diamond. That inscription could consist of a word, a combination of words, or an image. The inscriptions are so small, that they’re invisible to the naked eye. It typically takes a 15X to 30X magnification in order for the inscription to be noticed and readable.
If your diamond ring is ever stolen, the girdle inscription can become an easy means of positive identification for your diamond. Some jewelers and many grading laboratories have the ability to inscribe the girdle for you, using a micro-laser beam.
It’s also a good idea to keep the receipts for your ring in a safe place. Those receipts help to prove where you purchased your diamond and what you originally paid for it. That documentation might be handy if you ever want to resell the ring in the future. It might also prove useful to have the receipt if you file an insurance claim at some point down the road.
What to do if You Experience Loss or Damage
If you ever experience a covered loss and need to file a claim, you’ll typically start by either reaching out to your insurance agent directly, for help with filing a claim, or you’ll contact a claim center by phone to begin the process.
Remember how I mentioned my little sister’s cracked diamond early in the article? She decided not to replace it with another diamond. Instead, she purchased a simulant (a Cubic Zirconia) for less than $100. She then put the rest of the insurance money toward paying down debt. It’s great that she had that option.
You’ll likely have this same opportunity if your insurance company pays you for a damaged, or stolen, lab grown diamond at some point in the future. You can replace the diamond with a comparable lab created version, or you can try a much less expensive stone, like Moissanite, and then apply the rest of the money toward other things.
Can lab created diamonds get scratched?
Lab created diamonds are just as hard as earth grown diamonds—and sometimes even harder. That extreme hardness, provides them with scratch resistance. Diamond is very unlikely to scratch, but it technically is still possible. A diamond, for example, is capable of scratching another diamond.
Do Lab created diamonds get cloudy?
Lab created diamonds won’t take on a cloudy or hazy appearance over time. Like any ring, they can, however, collect dirt and oils that dull their appearance. Washing your diamond with mild dish-soap, warm water, and a soft toothbrush should clean away build up and restore it to its original brilliance.
Do lab grown diamonds hold their value?
Any ring bought at retail, will resell, as a used item, for less than its original purchase price. Lab grown diamonds should resell at a discount percentage that’s similar to earth grown diamonds. They ultimately resell for less than earth grown, simply because they cost so much less to purchase new.