Insurance question

[Court815]

Hi Everyone! I’m in the process of filing a claim for lost jewelry. The item is insured for over twice what the insurance company is offering to replace it. I don’t know why they’d let me insure something for more than it’s worth!

I wanted to see if this is normal. Is there anything I should be thinking about?

Thanks!!

 

[oldminer]

The insurance company generally has the right to make a fair replacement in nearly every case unless you have a cash value type policy. You probably never read the fine print on the policy. Many insurance reports are "feel good" ones that look at high retail pricing, when many folks today shop online and hunt for better deals. You needed less coverage, possibly.

If you bought a lab diamond, prices have fallen. You needed a re-appraisal at a lower replacement value. Many readers have too much insurance and are paying too much insurance premiums. That responsibility is on the consumer to keep up with the market as it changes.

 

[tyty333]

Hi Everyone! I’m in the process of filing a claim for lost jewelry. The item is insured for over twice what the insurance company is offering to replace it. I don’t know why they’d let me insure something for more than it’s worth!

I wanted to see if this is normal. Is there anything I should be thinking about?

Thanks!!

Yep, most insurance companies will let you pay premiums for inflated (feel good) jewelry appraisals. The fine details on most policies
say they will give you the replacement value. So, if you pay $6k for something and the insurance can replace it for $5k or $7k (current
market value)...that's all you'll get. You will not get $12k (twice the item's value) just because you've been paying premiums on a
"fake" inflated value.

How to get around this...

My insurance company allows me to insure my items for what I pay for them. If diamonds go up some I'll pay the (usually minor)
increase to replace the lost item (this is something I'm willing to do to keep my premiums down).

However, some insurance companies require appraisals for insurance purposes. Ask for a not-inflated insurance
replacement appraisal. Should be close to what you paid for the item plus a small increase. This keeps the premiums low but
gives you enough to repurchase the item if you should lose it. If prices do jump significantly on diamonds you may want to get a
new "replacement" appraisal that represents the current market and update your insurance policy.

Good luck!

 

[MissGotRocks]

Yep, most insurance companies will let you pay premiums for inflated (feel good) jewelry appraisals. The fine details on most policies
say they will give you the replacement value. So, if you pay $6k for something and the insurance can replace it for $5k or $7k (current
market value)...that's all you'll get. You will not get $12k (twice the item's value) just because you've been paying premiums on a
"fake" inflated value.

How to get around this...

My insurance company allows me to insure my items for what I pay for them. If diamonds go up some I'll pay the (usually minor)
increase to replace the lost item (this is something I'm willing to do to keep my premiums down).

However, some insurance companies require appraisals for insurance purposes. Ask for a not-inflated insurance
replacement appraisal. Should be close to what you paid for the item plus a small increase. This keeps the premiums low but
gives you enough to repurchase the item if you should lose it. If prices do jump significantly on diamonds you may want to get a
new "replacement" appraisal that represents the current market and update your insurance policy.

Good luck!

Yes, thankfully my insurance company accepted receipts when I purchased as the cost basis of the insurance. Inflated appraisals are worthless and cost consumers money!

 

[Lookinagain]

I agree that when you get a appraisal, you should ask for "insurance replacement" value. It is generally much less than a "retail" appraisal. The insurance company is happy to take the premium on the higher amount, but they will only pay you for what it costs to replace the item, not what the "retail" appraisal says.

 

[oldminer]

Sorry. Lookinagain. You are on the right track in being more specific with an appraiser when you have been a good shopper and not paid more than necessary.
However, appraisers are taught that Retail replacement value is pretty much the same as Retail value. As a consumer, having a discussion with the appraiser that you bought the item online from a highly competitive seller, or made the purchase of an estate item from a fair minded dealer will help make the situation much more clear.

Appraisers are scared of giving low values without confidence that you will not misuse their appraisal to try to force a decent seller to take back an item because the report indicated they charged you too much. Appraisers fear of this problem. based on your specific request to give a lower than standard appraisal report value.

 

[Lookinagain]

Sorry. Lookinagain. You are on the right track in being more specific with an appraiser when you have been a good shopper and not paid more than necessary.
However, appraisers are taught that Retail replacement value is pretty much the same as Retail value. As a consumer, having a discussion with the appraiser that you bought the item online from a highly competitive seller, or made the purchase of an estate item from a fair minded dealer will help make the situation much more clear.

Appraisers are scared of giving low values without confidence that you will not misuse their appraisal to try to force a decent seller to take back an item because the report indicated they charged you too much. Appraisers fear of this problem. based on your specific request to give a lower than standard appraisal report value.

That's interesting. I've previously asked for two appraisals, one of "retail" value and one of "insurance replacement value" and have gotten both, with definitely different values. I insure based on the insurance replacement value.

 

[Court815]

Thanks, everyone! I was very naive. I know better now!

 

[oldminer]

I encourage proper value appraising.

When I provide a competitive, seemingly low value appraisal to a knowledgeable client, I use the term "Discount retail value" to describe it. Normal retail value reports are "Retail replacement value new" and would be more what a fair bricks and mortar store charges. Reports on items from places such as Cartier and Tiffany reflect what those special places charge for what they sell.

Paying to much for insurance is all too common. There is no mystery that it is profitable for insurance companies and also makes make consumers happy they got a "deal" or that they are completely covered in case of loss. While it makes no financial sense to be over-insured, an appraiser never wants to be a dollar too low. Most consumers want coverage that is overly high instead and it is difficult to have total certainty of sufficient coverage in an inflationary market or a deflationary one.

Currently, we have an unusual weakened diamond market in flux combined with a rising gold market. While appraisers don't forecast future prices, we want to protect consumers with a sufficient amount of declared value. Conversations with clients can be very useful in meeting their needs and understanding their level of financial sophistication.

 

[Niel]

So a few things about insurance generally - the people who agree on the valuation upfront are not the people who pay out the insurance on a claim. Underwriters are typically the ones who agree on what is acceptable proof of value. Claims adjusters determine payout in the event of a loss.
Insurance companies “let you” insure for more than it’s worth for a few reasons. First, you’ve provided proof of value, they’re not typically going to argue the validity of your proof of value (though my recent experience suggests otherwise ) nor should they. If that is what you paid, if that is what an experienced 3rd party thinks it’s worth, then the insurance company shouldn’t argue that( unless wholly inaccurate ) . Secondly, many policies are not going to pay more than you insure it for. Whether that’s a stated value or actual cash value, they usually pay up the stated amount, so better the err on the side of caution. Some replacement cost coverage has a buffer for going above- but idk if jewelry companies offer that.
you can go back to your claims adjuster, or at least, a good company would let you, and have a conversation. Have receipts, have photos, express your concern about not being able to replace the item with like kind and quality. They didn’t come up with the number from thin air, they should be able to provide you information on how they came up with that payout amount.
Also the idea that “insurance companies will let you over insure because they want the rate” is not usually in the best interest of an insurance company. E&O complaints and DOI complaints cost time and money.

IMHO the point of insurance is to get you back to where you were before the loss occurred. If you are able to replace your item with the payout you’ve received from your claim- the insurance has met its expectation.