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Engagement ring legal checklist

Did you know that 10 percent of all engagements take place on Valentine’s Day? Are you one of the many people proposing this February?

The decision to get married is a time for celebration, but don’t let your emotions override your judgment. If you’re thinking about popping the question this Valentine’s Day, here are some important practical and legal considerations you should know about before buying an engagement ring.

First, you may want to consider insuring any engagement ring in case it’s ever lost, stolen, or damaged. You have a few options: you can have the ring appraised by a jeweler and then add it to your homeowner’s insurance policy, you can buy an actual value policy, or you can buy a replacement insurance policy.

Homeowner’s Insurance Policy. Some homeowner and even renter’s insurance policies allow jewelry to be added to the coverage or allow you to purchase an extension or rider that covers your engagement ring specifically. However, you should read the fine print closely and make sure that loss or theft is covered by your current policy as many homeowner insurances will only cover loss in the event of a natural disaster, such as fire, earthquake, or flood.

Actual Cash Value Policy. You can also purchase a standalone actual cash value policy. These policies will replace your ring at the current value minus any depreciation. For example, if your ring cost $4,000 and the ring is stolen five years later, the insurance company may only pay you $1,500, taking into account the five years of depreciation on the ring.

Replacement Insurance Policy. A replacement insurance policy will refund to you the market value of the ring you bought.

Second, do your homework before you buy the ring. Compare prices online and in retail stores and do some research on the jewelers themselves by checking their Yelp and Google Reviews. You can always ask a few friends who are already married where they got their rings. You should also look into the dealer’s Return policy. Return policies can allow you to exchange or get a full refund within 30 to 60 days.

Do some research on jewelry and gemstones so that you are prepared. For example, you may want to ask questions about the gem’s certification: diamonds are often graded by a reliable certification agency like GIA or AGS, so you may want to be wary of a diamond without one, or you may choose to compare prices on similarly appraised stones. Doing this research could enable you to negotiate better.

Third, once you buy the ring, and assuming you can return it, you may want to get a second opinion to make sure you paid the appropriate price. In the jewelry industry, it’s standard to ask for a second opinion and you can get your diamond independently appraised by a third party before getting down on one knee. There’s a huge caveat that’s important to point out here: an engagement ring, while arguably an investment in you and your partner’s life together, is almost always a poor financial investment, and the price a jeweler is willing to buy your ring for will be much less than what they would sell it for or appraise it for. It’s important to be aware of this when you set a budget. Check out eBay, Craigslist, or even to see what preowned rings sell for—it’s possible to get a good deal on one if you know what you’re looking for, but buyer beware.

Fourth, you can have your ring numbered so that it could be identified if it’s lost or stolen. Typically, couples choose to have their diamond’s certificate number laser-inscribed on the side of the stone or ring to allow the ring to be identified in the future. These laser inscriptions do not usually impact the ring’s value and they are relatively cheap: $40 to $100. It’s a wise investment.

Fifth, your paramour’s desire for a sparkly engagement ring is totally normal. Even if you’re dismayed at the going prices (the average cost of an engagement ring in 2015 was $2,000 to $5,550), the custom of giving engagement rings is far from new. Some historians believe that this tradition began back in Ancient Egypt where people wore an engagement ring on the fourth finger of the left hand because the Ancient Egyptians believed that this finger contained a vein which led to the heart.

Sixth, be sure you look into any local or state laws that may impact your decision. For example, in California, if you give an engagement ring and the other person calls off the marriage, you can get the ring back, but if you call off the marriage, then the other person gets to keep the ring. But a good way to set rules on who keeps what property (e.g. your engagement ring) is to create a Prenuptial Agreement.

Lastly, enjoy the excitement of your new engagement!

Amanda Gordon, Esq.

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