Getting your diamond ring damaged or stolen isn’t the nicest feeling in the world, even if it’s a lab-grown diamond. Even though this hasn’t happened to you, it doesn’t mean it won’t.
So, now you’re asking yourself: Can you insure a lab-grown diamond?
The answer is: Yes, you can insure a lab-grown diamond just like the mined diamond – despite some people claiming that lab versions are hard to get coverage for.
Now, you’re probably thinking, which coverage is the best? Where can I get a policy? And how much do they cost?
Answers to these – and many other – questions are covered below. Let’s dive in.
What Are Lab-Grown Diamonds?
Before we even start, we need to explain what lab-grown diamonds are.
As the name implies, lab-grown diamonds – also known as artificial diamonds – are grown in controlled laboratory environments. That was made possible by using advanced technological processes that recreate the conditions under which “real” diamonds develop naturally.
These lab-grown diamonds consist of carbon atoms arranged in the characteristic diamond crystal structure. Since they’re made of the same material as natural diamonds, they show the same chemical and optical properties.
Despite the fact that lab-grown diamonds exhibit the same properties, they are less expensive than natural diamonds. That, of course, doesn’t mean you can’t insure them.
The Purpose Of Insurance – Diamond Edition
Let’s say you dropped your diamond ring on the tile floor. While picking it up, you realize the diamond is cracked.
You would probably be sad because of the sentimental value of that ring. On top of that, you would realize how much it will cost to replace the now broken diamond.
Usually, people don’t have the funds available to replace damaged diamonds when stuff like this happens. So, they either go without a ring, borrow the money – or wear a replacement until their ring is fixed.
That is where insurance helps a lot, as it can cover the financial side of a loss we mentioned above.
If you have coverage for your diamond ring, you can file a claim and collect the money from the policy for your damaged diamond. So, you can replace the diamond without too much worry.
Diamonds might be famous for their hardness, which makes them resistant to scratching – but they are not indestructible.
On top of the risk of being damaged – either by breaking or chipping – diamonds could also get stolen or even lost.
Insurance is there to help you against various losses that you can’t afford.
If you pay a reasonable premium each month, you can avoid a bit of a lump-sum financial hit.
You need insurance against catastrophic health problems, but you most certainly don’t need insurance for, let’s say, a CD. If your CD gets scratched, you can just buy a new one since it’s not that expensive.
Similarly, you might need insurance for your diamond ring, which you paid a whole fortune. But you wouldn’t bother if the cubic zirconia ring that you paid $90 gets scratched or broken, now, would you?
There are two ways of protecting yourself from the financial impact of a stolen or damaged diamond – jewelry insurance and self-insurance.
Read Also: Are Broken Diamonds Worth Anything?
Self-insurance is meant for covering the financial impact of a worst-case scenario.
Let’s say you put $2500 into a Certificate of Deposit. That money is meant for ring insurance. If you damage or lose your diamond ring, you can pull out the money to replace or repair the ring.
By doing so, you won’t cause a significant financial impact as the money was already set aside.
If you never lose or break your diamond ring, you can pull out that money and spend it on something else.
This approach is perfect if you have the cash available – and you can generally save a lot by doing so.
However, if you don’t have $2500 laying around, you can still go the same path by setting some money each month. That money will build up over time until you have several thousand dollars available.
If you would like to contribute to savings over time, you may also want to think about short-term solutions if the problem occurs before you’ve built up significant savings.
Recognizing opportunities and risks, it’s up to you to decide whether it’s better to insure your lab-grown diamond for that added peace of mind.
You can technically get a certain amount of coverage through your homeowners, or renters, policy. And usually, those will cap at $1000 to $1500 – but that’s still better than nothing, right?
If you want a higher coverage amount, you’ll need to get a specific jewelry rider. Quality of coverage is pretty easy to obtain for both lab-grown diamonds and earth-grown diamonds.
The process of coverage starts with a jewelry appraisal to determine the diamond’s value.
If the estimated value of your lab-grown diamond is too high, you’ll pay more in premiums. On the other hand, if it’s too low, you might not end up with enough money to cover the cost of the replacement.
Another approach is comparison shopping: You can find several rings that seem to be similar to yours and average their costs to get a reasonable replacement value. By doing so, you can estimate your coverage level, too.
The second method is faster and inexpensive – but the downside is that it can be a lot less accurate.
A formal appraisal provides confidence to future potential buyers. Furthermore, this value estimate is the most effective way to factor in the uniqueness of your lab-grown diamond.
Learn More: Will Lab Diamonds Hold Their Value?
The Cost Of Jewelry Insurance Coverage
Prices of jewelry insurances are based on the total insured value of the item. It will usually run 1% to 2% of the total insured amount as an annual premium.
For example, a $3000 diamond ring would cost around $30 to $60 per year to insure.
You can usually decrease insurance premiums by using a safe to store your diamond ring when you’re not wearing it. Also, you can keep essential documentation – such as grading reports and receipts – in the safe too.
Moreover, ask your insurer if they offer any discounts.
If you decide to get coverage, you should do it as soon as possible. Don’t risk damaging your lab-grown diamond before your policy goes into effect.
However, policy cost isn’t the only thing you have to take into consideration. Let’s look at some additional factors that need to be considered.
- The type of solution offered by the policy – replacement value, agreed on value, or actual cash value.
- What are the exclusions?
- Is there a deductible?
- How does the policy address the issue of inflation?
- What are the forms of damage covered by the policy?
- Ease of working with the insurance company
- Are there restrictions on where you can take your diamond ring for repair?
- What kind of proof do you need if the ring gets stolen or lost?
- Are there geographic limitations to coverage?
You can just simply call and ask insures about these issues. It will help you find someone that has the right combination of price and features. Also, online reviewers can provide additional information about the quality of a particular insurer you’re considering.
Learn More: How Much Does It Cost To Insure A Diamond Ring?
Types Of Policies
Individuals enjoy different types of policies for various reasons; hence insurance is seldom a one size fits all proposition. Let’s take a look at the different types of policies.
The goal of jewelry insurance isn’t to make a profit from a loss but rather to make you whole again following that loss. This insurance will help you replace your damaged or lost diamond ring.
However, you might disagree regarding how alike the insurance company’s ring actually is.
The advantage of this type is that it guarantees the amount that the insurance company will pay for a covered loss. But if the value of the lab-made diamonds rises, the contracted value on the policy may not be enough.
Actual Cash Value
The pro of this policy is that it’s the easiest to obtain and cheapest. Companies often prefer to sell this one.
However, every year that passes, the payout value of your insurance policy gets lower. That is due to the depreciation percentage continually grows higher.
In conclusion, replacement value policies usually provide the best benefits. With that being said, make sure you read all contract language regarding exclusions before you commit to a specific policy long-term.
Reviewing And Updating Your Policy
Insurance isn’t something you set up once, and then you forget about it. You’ll need to confirm the value of your diamond ring at least every three to five years.
If the price goes up, you may need to increase the amount of coverage, too.
Contrarily, if the average value of lab-grown diamonds goes down, you won’t need as much coverage to replace your ring.
So, you can decrease the amount of your coverage to reflect the actual replacement value.
Additionally, you can have your ring appraised every few years to confirm its value. But that isn’t necessary – nor ideal – as the cost of appraisals adds up over the years.
You could ask about the warranty offered by the retailer. Be careful, though, as store warranties sound nice on the surface, but they aren’t worth much in reality.
Related Read: Diamond Appraisal Vs. Diamond Certification
How To Protect Your Diamond Ring?
Make sure that your diamond is graded by one of the leading labs like the Gemological Institute of America or the International Gemological Institute. These labs will provide you with a report that describes your diamond in detail.
That will ensure that you don’t get short-changed.
A grading report from GIA for lab-grown diamonds isn’t exactly the same as their reports for mined diamonds. They provide fewer details related to color, for example.
Because of this, an IGI report is considered more valuable, as their reports are identical for any lab-grown and mined diamonds.
Additional precaution measures include keeping detailed records of any work done on your diamond rings – such as repairs, enhancements, and adjustments. You can take pictures that show every detail of the diamond ring and keep them in the safe.
It will help the insurance company with verifying its value.
You can also have a micro inscription lasered on the outer perimeter of your lab-grown diamond. These inscriptions are so small that they’re invisible to the naked eye. If your diamond ring gets stolen, inscriptions are means of identification for your diamond.
You should make sure you are keeping the receipts for your diamond ring in a safe place. Receipts are proof of where you purchased your lab-grown diamond and what you originally paid for it.
Don’t Fall For Everything You Read Online
We’ve seen misleading information online that claims lab-grown diamonds are difficult – or even impossible – to insure. Chances are you’ve seen similar comments, too.
That is simply not true – but don’t just take our word for it.
Be sure to call your insurance agent and tell them that you would like to insure your lab-grown diamond ring. You’ll find that they view it the same they view a mined diamond ring.
Insurance companies are more than happy to insure lab-grown diamonds.
Think about it; insuring not just diamonds but any other asset by accepting a fair premium is what these companies do. Why would they say “No” to you?
Read Also: Does Insurance Cover A Chipped Diamond?
If you’re still asking yourself: “Can you insure a lab-grown diamond?” the answer is definitely yes.
Lab-grown diamonds exhibit the same physical, chemical, and optical properties as their mined counterparts. They are diamonds, after all – just with different origins.
There are two options when it comes to protecting yourself from the financial impact of a damaged or stolen lab-grown diamond – self-insurance and jewelry insurance.
When it comes to policies, there are three different types: replacement value, agreed value, and actual cash value. Each of these types comes with its own set of pros and cons. So, be sure to check with your insurer which one fits you the best.
There are several other things that will help you protect your lab-grown diamond if it gets broken or stolen. These include grading conducted by major labs, taking pictures of your diamond ring, and micro-inscription.
With everything else that might be bothering you, be sure to get in touch with your insurance carrier and ask for additional information.
Related Read: How Can You Tell If A Diamond Is Lab Grown?