Money Rehab with Nicole Lapin - Lily Collins' Cautionary Tale: Should You Get Jewelry Insurance?

Episode Date: May 11, 2023

You may have seen in entertainment news this week that Lily Collins, the star of the Netflix show Emily in Paris, had her engagement ring stolen. As so often is the case, when we hear a story like this, we put ourselves in the headlines: what would happen if my engagement ring, or a family heirloom, was stolen… what would you do? Would you be protected? Today, Nicole explains your insurance options— and why if your dog has a tiara, you're probably screwed.

One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that

I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details.

I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. You might have seen in entertainment news this week that Lily Collins, the star of the Netflix show Emily in Paris, had her engagement ring stolen. Collins was at the spa at the Addition Hotel in Los Angeles and had put some things in her locker, her engagement ring and a couple of other items. But when she returned from the spa, her stuff was gone. Now, it's an ongoing investigation. Apparently, there's no evidence that the locker or the spa was broken into and the police haven't made statements about the security

footage from the spa. But as is so often the case when we hear about a story like this, we put ourselves in the headlines, right? What would happen if my engagement ring or a family heirloom was stolen? What would I do? Would I be protected? If you have homeowners or renters insurance, you might think that your engagement ring or any other pricey piece of jewelry, if it was stolen, was covered by your policy. But that is not often the case. A standard home insurance policy might say it covers jewelry, but it might not cover high value jewelry,

which is how some engagement rings are defined. It's most common for a home insurance policy to cover only up to $1,500 for the theft of jewelry or other valuables. As a side note here, as I'm talking about this, I'm going to use the example of engagement rings because it's the question that I've seen around the Lily Collins story. But these rules, of course, apply for any jewelry or watches. The most common way people get insurance for jewelry is to either add on an extension to their home insurance policy that covers jewelry or buy a specific policy for a piece of jewelry that's entirely separate from homeowner's insurance. Either option will actually cover you in more circumstances than if you only rely on your home insurance policy. For example, with a jewelry

insurance policy, you'll be covered for theft or if your jewelry mysteriously disappears. That is not necessarily true of home insurance policies. However, even with a jewelry insurance policy, there are some exceptions around what's covered like normal wear and tear on the jewelry. But my personal favorite exception is the one that Geico lists on their website. They say, quote, items such as dog jewelry tiaras will not be covered. That is a real exact quote from the website, guys. How many Geico customers are trying to get insurance policies for dog tiaras? The world may never know.

But let's take a step back. Obviously, insurance isn't free, right? You're looking at paying a monthly premium in order to have the coverage. Typically, the monthly premium for jewelry insurance is going to be about 1% to 2% of the value of the piece. So for example, if you paid $5,000 for your engagement ring, the insurance policy would cost you about 50 bucks a month. So let's just put a price tag on this story. And I'll use our executive producer Morgan as the example, because this is a conversation that is very top of mind for her. Her boyfriend Jack recently bought her an engagement ring. I know, I know, I'm verklempt. My heart feels so full.

He did not pay five grand for the ring. You'll actually hear more about this whole process in another episode. But for the sake of easy math, let's just pretend he spent five grand and then he got a jewelry insurance policy. So Jack is 30 years old right now. And let's say that they were married for the rest of their lives, notebook style. We'll call it another 60 years. If Jack pays for insurance on that ring every month, he will have paid $3,000 in insurance over the course of his life or more than half the cost of the ring. So on one hand, if the ring is lost or stolen over the course of those 60 years, he's not going to have to pay for it twice. But they will shell out a lot of money to an insurance company over the course of their

wonderful marriage for having the ring in their possession. Whether or not that feels good to you is probably up to you and your risk tolerance level. Another factor to consider is whether the ring is appreciating or depreciating, but that's a topic for the follow-up episode about Morgan's ring that I'm alluding to. Here's a sneak peek. There are mined diamonds, which we think of as traditional diamonds, but there are also lab-grown diamonds that are much cheaper. As a general rule, mined diamonds tend to appreciate, while the value of lab-grown diamonds either depreciate or stay the same. But say you have a mined diamond that is appreciating. Should you get the insurance?

I'll be honest with you, and this is a slight rant, but stay with me. I have recently warmed up to the hot take that so much insurance is a scam. Now, I say that, but I do have health insurance. I have car insurance. I have health insurance. I have car insurance. I have home insurance. I have life insurance. I insure a lot of shit. The backstory, though, is that I had a car accident last year and my insurance company fought me for the coverage that I had paid for, meaning I had forever and always paid my auto insurance. And then when I needed it, it was really, really difficult to actually use it.

The whole experience was awful, and it really made me think critically about the whole insurance system. I'm not going to go full nuclear on insurance just yet, but I'm thinking about what it would have looked like if instead of giving my car insurance company two grand a year, I invested two grand a year with the sole purpose of using that stash of money for any issue that comes up with my car if I needed it. But if I never need to use it for a car issue, then that money would be available for me to use for other things instead of just with my insurance company. I will say that while health insurance is totally broken in this country, you do need health insurance. The risks of being

uninsured and needing care seriously outweigh any reward of keeping that money that you would have otherwise contributed to a health care plan. But the rest of the insurance world, the jury is out for me personally. Anyway, that rant is over for now. But the long of the insurance world, the jury is out for me personally. Anyway, that rant is over for now. But the long and the short of it is, I think insurance is actually more personal than we typically think. So when you're deciding whether or not to insure your own jewelry, you'll need to decide what your risk tolerance is

and whether you'd be good with replacing the item out of pocket if there's a loss or theft. So back to Lily Collins. Her net worth is rumored to be $25 million, although net worth estimates on the internet are usually a whole lot of BS. But I think it's safe to say that she and her boo would be able to get another ring. The thing, though, to remember with jewelry insurance is that if your item gets lost or stolen, the insurance company will write you a check, but the insurance company can't replace what was lost. Collins' ring was made by jewelry designer Irene Newworth, who said the ring was one of a kind. So even though they will get the money

to replace it if she had jewelry insurance, it cannot be replaced. If you're sold though on jewelry insurance and you're saying, lapping there is no way I will buy an engagement ring twice if something happens, cool, cool. A good place to start is wherever you got your jewelry. Jewelers will typically be able to point you in a good direction for insurance. Now, don't take their word as gospel because if you shop at a super fancy spot, that spot might partner with a super fancy, expensive insurance company and no thanks. But it's a good place to start. And while you're there, ask if there's courtesy cleaning or tune ups, because getting your engagement ring setting tightened will lower the chances of the gems falling out. And that is one fewer reason to

get insurance. For today's tip, you can take straight to the bank. If you do start to look for jewelry insurance policies, pay special attention to the deductible. As we know from our health insurance policies, the deductible is how much you're going to have to pay out of pocket before your insurance policy kicks in. So if you have insurance and your $5,000 ring gets stolen, you might think, all good, I have insurance. But if you have a $4,500 deductible, you would only get $500 back. So pay special attention to how it all adds up to determine whether the plan is really beneficial to you. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it

under control for my financial future and also for my mental health. We've all hit a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime.

Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime. Feels like progress. Banking services and debit card provided by the Bank Corp. Bank NA or Stride Bank NA. Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in Spot Me and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin.

Money Rehab's executive producer is Morgan Levoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehabatmoneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.