Insurance and appraisals

[Flowery]

I have an antique piece of jewelry that I recently got re-appraised for the purpose of an insurance policy. The appraisal overvalued the piece by about 40%. Should I go ahead and insure using the appraised value as the replacement value, or would it be okay to submit a more accurate value as the replacement value to my insurance? The difference in premium will add up over the years. Thanks in advance for your wisdom!

 

[yssie]

Antiques can be challenging to value as rarity convolutes replaceability. If you’re confident the piece is overvalued you’ll want to talk with your appraiser.

The paperwork that you submit to your insurance company should reflect the valuation that is most reasonable, with a small (think 10-15%) margin for projected inflation within the next few years - at which point you might need to re-appraise.

 

[Flowery]

I should add that it’s antique but not rare by any means. I could buy similar online right now for 60% of the appraised value. And also a more specific question: Is it really necessary to go back to my appraiser for a revision if my insurance doesn’t require any paperwork except in the event of a claim? In other words, if the item were completely destroyed or lost, would they deny a claim given that the appraisal is higher than the value I insured it for, even if it can be easily replaced for that lower value?

 

[yssie]

I should add that it’s antique but not rare by any means. I could buy similar online right now for 60% of the appraised value. And also a more specific question: Is it really necessary to go back to my appraiser for a revision if my insurance doesn’t require any paperwork except in the event of a claim? In other words, if the item were completely destroyed or lost, would they deny a claim given that the appraisal is higher than the value I insured it for, even if it can be easily replaced for that lower value?

I suspect the answer to "can I insure for less than appraisal/receipt" is carrier-specific, so you'd have to check with your provider. I imagine the vast majority of providers will decline - the appraisal outlines what the insurance company is required to replace for (or with) in the event of you making a claim. If you pay premiums for "less than" the appraised value, then the insurance company should be on the hook for "less than" the appraised description - and what "less than" actually is will devolve very very quickly.

I have to ask though - if you got an appraisal for the sole purposes of (A) identifying what you have, and (B) identifying replacement value of what you have for insurance, and you're not going to actually use this appraisal for insurance, why bother with it at all? You paid for a service; I would suggest that you do yourself a disservice by not following up with your appraiser.

 

[Flowery]

You’re totally right about the ridiculousness of getting an appraisal for insurance then not using it. My insurance doesn’t require one for creating a policy but does require one in the event of a claim, so I guess insofar as the specs are correct on the appraisal, it would be fine as documentation in case the need for replacement arose. I also heard that many insurances, regardless of the declared value, only provide their determined wholesale value in the event of a loss (arguing for insuring at a lower value). I’ll have to get my insurance to state in writing whether that’s the case or not.

 

[oldminer]

Speak to the appraiser and explain you only want to insure the item for something close to what you actually paid. Also tell the appraiser that you have found comparables which are in line with your request that are currently for sale.

Take the worry out of it for the appraiser and likely you will get a revised report with a lower value at no charge. You need to come across as knowledgeable and reasonable.
My major concern for my clients is to give them enough latitude to find a proper replacement, not to see them overpay every year on their premiums.

The appraiser should make an adjustment unless they believe they are totally correct. Most appraisers don't have such a large ego or know everything. You may show the appraiser what I wrote here, if you wish. That might ease their concerns a little bit, as well.

The days of appraisers writing "feel good" reports are mostly behind us. That's a good thing.

 

[meesmom]

My insurance co. (usaa) allows me to insure for less than the appraised value. My engagement ring appraised at $14k, but I know it can be replaced for under $12k, easily. So thats the amount i have it insured for. Ask your insurance company, they will tell you what you can and cant do. Good luck!!

 

[Flowery]

Thank you all for the advice! Glad to have your knowledge as a resource. Happy new year!