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So You’ve Been Given A Valuation With Your Engagement Ring. What About Insurance?

It’s fairly common nowadays for valuations to come with engagement rings and other jewellery, but usually they have some huge, seemingly meaningless value on them.

This leads to a fairly important decision when it comes to insuring your engagement ring – should you insure it for what you paid, or for what it is valued at?

Now on the face of it, it may seem like an easy decision – get it insured for what you paid for it – you’ll always be able to go back to the jeweller and buy it for the same or roughly the same cost.

However, when preparing a valuation, a valuer has to take into account many factors, such as:

  • Australian dollar fluctuations – remember back in 2001, the Australian dollar was trading at below US$0.50, it it now above 80 cents. Since diamonds, gold and other precious metals are all traded in USD, fluctuations will affect the price of replacement.
  • How long the valuation is designed to last. A valuation that lasts five years will carry more currency risk and inflation than one lasting one year. However, two years is pretty much standard.
  • How much the engagement ring or piece of jewellery would cost in a brick and mortar store, given a customer’s choice. Independent valuers don’t take into account whether you bought it from the internet or from Tiffany’s, however, a valuation for insurance purposes should assume prices from brick and mortar stores.

With all these factors to consider, a valuer must balance your interest (a lower premium) with a price that isn’t too low that it makes them liable for claims in the future.

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