UNINSURED HOLIDAY 'ICE' CAN MAKE FOR A CHILLY SITUATION EXTRA-COVERAGE POLICIES CAN PROTECT APPRAISED JEWELRY.

Byline: Evan Pondel Staff Writer

Santa's helpers picking up diamonds or other expensive things might want to buy one more gift: extra insurance to cover what many policies won't.

Most homeowners and renters insurance policies provide some coverage for jewelry. But when it comes to precious stones, purchasing a little extra coverage could be a wise investment should catastrophe strike.

``Major catastrophe, such as the recent fires, are causing consumers to want more coverage for items like jewelry and even plasma TVs,'' said Peter Moraga, spokesman for the Insurance Information Network of California. ``The problem is, many people don't understand the limits of their policy as it relates to expensive items.''

Jewelry, art and electronics may be insured through additional coverage known as floater policies. The coverage may also protect against catastrophes that are not usually included in a standard homeowners policy.

It is also important to determine whether an insurance policy provides replacement cost or actual cash value coverage, Moraga said. The difference: A replacement cost policy will replace a damaged or stolen item up to the policy limits without deductions or depreciation. A cash value policy pays the cost for replacement minus depreciation, according to the Insurance Information Network.

Many insurance companies offer what is known as Personal Article Property insurance. The cost of such coverage depends on the value of the item. At State Farm, underwriters generally base the cost on a percentage of every $100 of the item's value. Stephen Polacheck, a Calabasas-based jeweler, said the cost for insurance is generally $3.50 for every $100 of the jewelry's value.

Such policies don't only cover jewelry, though. Coin and stamp collections, pricey cameras, TVs, golf equipment and Persian rugs can be covered under PAP policies. ``But we do require an appraisal before we insure anything,'' said Ena Alcaraz, a State Farm spokeswoman.

Appraisers can vary in price, with most usually charging an hourly wage. Kessler Jewelers in Burbank is rather meticulous about its appraisals. ``Some people don't realize the amount of time it takes to do a good appraisal job,'' said Lisa Houpt, a gemologist at Kessler who said the jeweler charges about $70 an hour for an appraisal. ``It may take a week, and some people aren't prepared to leave an item with us for that long.''

Once the appraisal is finished, Houpt said, the customer must send the insurer a copy. And occasionally, the customer is less inclined to insure the item if the coverage is too costly.

Alex Angelle, a spokesman for the Gemological Institute of America, said more and more consumers are demanding a report card or certificate to verify the value of their diamonds for insurance purposes. There is even a laser inscription microscopically embedded in the girdle, or circumference, of a diamond to help certify its value.

These methods are particularly helpful as demand for diamonds remains robust in the U.S. ``Three years ago, diamond sales saw among their best years ever. And from what I've been told, this is shaping up to be their second best year,'' said Victoria Gomelsky, diamond editor at the National Jeweler.

But overall, jewelry sales are slightly off this year. So far, jewelry store sales are hovering at $17.94 billion for 2003, compared with $19.23 billion during the same period last year, according to the U.S. Department of Commerce.

And despite the recent fires throughout Southern California, Wilbert Smith, a personal financial representative for Allstate Insurance Co., said he hasn't seen an increase in policyholders seeking extra coverage for jewelry. ``Maybe some individuals just don't understand the value of insurance,'' said Smith, who also holds a Ph.D. in business management.

But when jewelry is insured, rings and bracelets are among the more popular items. Musicians also inquire about coverage for their instruments at times, Smith said.

Maria Lopez, who works for the American International Gemologist Laboratory, has seen an increase in business of late. ``A lot of people seem to be selling jewelry online and people need appraisals,'' she said. ``The most expensive piece of jewelry we've appraised went for $500,000.''

The Insurance Information Network suggests homeowners and renters review and update their policies once a year, or even after the purchase of expensive items. The organization has provided a home inventory guide at www.iinc.org for information on several insurance companies offering coverage for jewelry.

Evan Pondel, [phone]

evan.pondel(at)dailynews.com

CAPTION(S):

3 photos

Photo:

(1 -- color) Graduate gemologist Barry Kessler examines a diamond engagement ring at Kessler Jewelers in Burbank.

(2 -- 3) Graduate gemologist Lisa Houpt, above, shows a gem to a customer at Kessler Jewelers in Burbank. Diamond tennis bracelets, right, are popular holiday gifts, but can easily be lost in catastrophes such as the recent Southern California wildfires.

Michael Owen Baker/Staff Photographer