Insurance on branded diamonds...

[MrIndecisive]

From what I have been able to tell so far most insurance companies simply replace the diamond with a similar diamond if it is lost, stolen, broken, etc... rather than give you the replacement value in cash. Is this correct?

I really don't like this idea as I, like most people on PS, put a TON of time and research into finding the best cut possible. I am afraid that if I need to put a claim in, the insurance company will just go out there and replace it with the first thing they find that meets our diamonds 4 C's (which obviously would not be a fair replacement).

Here are my questions (#4 is the one that is giving me the hardest time):

1) Is this how most diamond insuarance works?

2) How much power do I have to turn down / refute the insurance companies replacement?

3) How do I improve my bargaining power (I'm assuming a good detailed appraisal is really all I can do)?

4) Are they required to replace brand premium on "branded diamonds"? I bought, and paid a premium for, a Whiteflash ACA brand, and if lost it I would really like to recieve the same brand in return, would they be required to give me a Whiteflash ACA diamond as a replacement? If so, then wouldn't a "branded diamond" offer added protection insurance wise?


Thanks to everyone for all your help! This site is great. I proposed last Friday night (Friday the 13th!) and everything was perfect! Everyone LOVES the diamond (especially my fiancee, although she might argue that I love it more). My fiancee already walked in on people at work talking about how gorgeous it was! Here's a hand shot (I need to work on taking better diamond photos)...

Is there a way to make the image smaller and keep the same resolution ( I think the larger than life size look is a little weird

)?

 

[laney]

Hiya!

I did this exact process last july. There are a bunch of my posts hanging out around here. I was insured as a rider to my homeowners insurance policy with Allstate.

First let me say - this is not the only type of insurance you can get. You can get cash out policies with CHUBB insurance - search on this forum for lots of information about it.

My personal experience -

I had a GOG H&A F S12 Round Brillant stone that I researched for a while to get. Imagine my horror when I BROKE the diamond in a shopping cart accident. Doh!

When we insured the diamond we had an apprasial, and detailed documentation provided by Good old Gold including Sarin reports, I2See information, Brilliance scope, etc. We sumbitted that at the time we insured.

Our policy is a "replacement" policy. Which means the insurance company will replace the item with equal "value".

When I broke my stone I was EXTREMELY worried about this!!!! Would they get me an H&A stone? Would they replace with a stone with my preferred measurements? Would the stone have the same results in the Brillancescope and or other tools?

I had my new stone within a week. This is what happened

I called to report the damage. They had a "jewelery" specialist contact me. They had NONE of my paperwork ::gasp::, and told me that I can go visit one of their approved jewelers, they would evaluate the stone, and give me a new one from their stock. ::double gasp::. I pleaded my case about the quality of my stone briefly - she quickly referred me to the jeweler.

They apparently rely on the jeweler to make the call. And I also found out - if the jeweler can''t find something they will "cash you out". However - it is NOT the amount of the insured value - it is the amount of what HE could replace it for. There is a Catch here...

So I took all my paperwork to the jeweler - and told him ahead of time I want to replace my H&A stone with an H&A stone. Guess what - they only had (1) stone.. and it was very deep (63%). I told him that, I would wait until I found a similar stone with the same stats. After a half an hour - he knew that I knew my stuff and I wasn''t going to be satisfied. He said that he would reccomend for me to get the money.

So - the agent called a few hours after our meeting and sent a check. The check was not the amount insured. however it was 3K MORE than we paid. So - I replaced my stone just fine! It was enough to get the H&A stone in the measurments and peformance I wanted.

So -- replacement policies can work. If you keep all of your paperwork and explain yourself, and demand the same product you have - then you will be fine!

Side note -- had I not known anything about diamonds - and I went to the jeweler I would have had a new stone set that same day . That would have been AMAZING service. Break stone on sunday - new stone on tuesday.


If you have any questions about the details, I''d be happy to help!

 

[MrIndecisive]

Thanks that is a great help! Glad to hear everything worked out for you! I guess it REALLY pays to know your stuff when it comes to diamonds, not only for buying, but also for replacing if needed!

I am still wondering do they have to replace the "brand premium". Seeing that you pay a premium for the “brand” (which I did) I would expect the insurance to replace not only based on the spec''s but also give us back that “brand” for which we intitially paid. Otherwise that would be like losing a Coach bag and having insurance give you a Sears leather bag and saying “it’s a 12" x 6" leather bag that looks just like your Coach bag so it is the same”. Could the "brand" help in forcing the insurer to provide a good quality diamond?

I have an appointment with one of the appraisers listed on this site. He''s totally independant and appears to very much recognize the importance of cut (that you can''t just use a watered down 4 C''s rating). I have an AGS diamond so the cut spec''s are right there on the report which should also help. I''m assuming he will be able to provide some tips on insuring the diamond, I just wanted to go into it with some knowledge.

 

[WinkHPD]

As Laney has said, it is imperative to have the data, in writing, and PRESENTED with the appraisal (it should be part of the appraisal) to the insurance company. If the diamond is branded you need the name of the brand in the insurance and when it is time to replace they must replace in like kind, including the brand name, IT''S THE LAW! (At least in Idaho.)

If they can not then they must pay in cash, at least enough to cover your replacement cost. The fact that Laney got an extra 3k reaks of incompetence on the part of the adjuster in my opinion. You making a profit on the insurance claim is called "enrichment" and the whole purpose of insurance is to make you whole, not to enrich you.

If your appraisal is good and contains ALL pertinent information, the replacement will be good.

Wink

 

[MrIndecisive]

This is from the Massachusetts Department of Insurance website:

"In most cases, insurance companies have the option to replace the item, if possible, through their vendor of choice. They do this because they generally can replace your item at less cost because of their ongoing business relationship with a specific vendor. Should you decide not to replace the item, your insurer may pay you only the amount that they would have spent to replace the item through their vendor. Fine art items are generally covered for the scheduled amount in the policy."

Seems to be very similar to Laney''s experience. In my case it is highly unlikely that their "vendor of choice" would be able to provide me with a "A Cut Above" diamond (unless they happen to use Whiteflash, which would be great but highly unlikely!) so I would assume I would then be eligible to receieve "the amount that they would have spent to replace the item through the vendor" just like Laney.

 

[denverappraiser]

The key is in the description.

If they opt to replace, they must replace with another of like kind and quality. Note: This is not the same as replacing with another of similar 'value'. This is a large part of the reason that they require you to supply the appraisal instead of simply hiring one themselves. By submitting the appraisal you are giving them the definition of the qualities that must be replaced. If you define a brand name (for example the ACA that you mentioned above), they must replace with that brand. They are welcome and even encouraged to call up Whiteflash and try to negotiate the best deal they can. I would expect WF to be thrilled to talk to them about it since insurance companies can make pretty good customers. Fine. If they replace your genuine ACA stone with a equally good genuine ACA stone or they offer an alternative that you find acceptable, they have complied with the terms of the contract. Otherwise, they have not.

Put another way, if you insure a Picasso, they must replace with a comparable Picasso, convince you to accept something else, or pay cash at the defined limit of the policy. The argument that they have an alternative painter who may be equally skilled has no merit nor does the argument that they have an alternative item of comparable value. It doesn't even matter if their adjuster likes Picasso's work. You liked it. You bought it. You insured it. They agreed to the policy.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[dhog]

Date: 1/18/2006 12:08:17 PM
Author: Wink
The fact that Laney got an extra 3k reaks of incompetence on the part of the adjuster in my opinion. You making a profit on the insurance claim is called ''enrichment'' and the whole purpose of insurance is to make you whole, not to enrich you.


If your appraisal is good and contains ALL pertinent information, the replacement will be good.


Wink

if this is true why do we need appraisals at all when it would
be just as easy for a ins. company to pay face value for a sales
reciept.if the appraisal says it is worth 3000 more than what
he bought it for after all the insurance premium is charged at x per
100 dollars in value.

 

[denverappraiser]

Date: 1/18/2006 7:02:43 PM
Author: dhog

if this is true why do we need appraisals at all when it would
be just as easy for a ins. company to pay face value for a sales
reciept.if the appraisal says it is worth 3000 more than what
he bought it for after all the insurance premium is charged at x per
100 dollars in value.

Binding an insurance policy for a new purchase on a sales receipt is often a perfectly reasonable choice. Most of the companies are happy to do this if the jeweler will provide you with detailed enough documentation. Insurance companies worry a great deal about what they call a moral hazard. This is when their client has an incentive to be less than careful with the piece because they have a potential gain by filing a claim. Much of this is solved, at least for a few years, by binding policies this way. Obviously this doesn’t work so well if there isn’t a sale going on or if the purchase wasn’t recent.
Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[rodentman]

When I lost my EightStar, which was insured on a rider to my homeowner''s policy, I insisted on another EightStar. I got it with no trouble at all from the ins company.

 

[dhog]

Date: 1/18/2006 7:19:36 PM
Author: denverappraiser

Date: 1/18/2006 7:02:43 PM

Author: dhog


if this is true why do we need appraisals at all when it would

be just as easy for a ins. company to pay face value for a sales

reciept.if the appraisal says it is worth 3000 more than what

he bought it for after all the insurance premium is charged at x per

100 dollars in value.

Binding an insurance policy for a new purchase on a sales receipt is often a perfectly reasonable choice. Most of the companies are happy to do this if the jeweler will provide you with detailed enough documentation. Insurance companies worry a great deal about what they call a moral hazard. This is when their client has an incentive to be less than careful with the piece because they have a potential gain by filing a claim. Much of this is solved, at least for a few years, by binding policies this way. Obviously this doesn’t work so well if there isn’t a sale going on or if the purchase wasn’t recent.

Neil Beaty

GG(GIA) ISA NAJA

Professional Appraisals in Denver

so if I buy a ring for 14,000.00 and had it appraised for
25,000.00 and the person that did the appraisal saw the reciept.
What moral standard did he do me as a consumer
and what ethical standard did he do for the insurance co.
the insurance co. charges me a fee based on his expert
opinion only to say later we can replace it for 14,000.00
so you see WE the CONSUMERS are charged for excess value
that was inflated in the first place.seems to me its just like
life insurance,if you have a loss pay up at face value or get out
of the game.

A potential gain could constitute fraud

 

[MissGotRocks]

Hello to Rodie and Louie!

Laney, did you insure your new stone with Allstate or did you opt to go with a company like Chubb the second time around?

 

[WinkHPD]

Date: 1/18/2006 7:02:43 PM
Author: dhog

Date: 1/18/2006 12:08:17 PM

Author: Wink

The fact that Laney got an extra 3k reaks of incompetence on the part of the adjuster in my opinion. You making a profit on the insurance claim is called ''enrichment'' and the whole purpose of insurance is to make you whole, not to enrich you.



If your appraisal is good and contains ALL pertinent information, the replacement will be good.



Wink

if this is true why do we need appraisals at all when it would

be just as easy for a ins. company to pay face value for a sales

reciept.if the appraisal says it is worth 3000 more than what

he bought it for after all the insurance premium is charged at x per

100 dollars in value.

Insurance companies do NOT like to make a profit for you, the potential for fraud is just too high. They will buy from a replacement specialist when ever possible who will sell to the insurance company at a lower price than what they would have to pay a normal retail operation. Some have even gone to using in-house replacement specialists to save even more money. Unless you have a face value policy you will get a replacement piece or a check for what it would have cost them to use one of their specialists if you choose not to replace, not the amount that the appraisal is written for.

Thus, the better your stone, the more information you need IN THE BODY OF THE APPRAISAL to assure that the insurance company must provide you with a stone of the same or better quality.

Many of the so called appraisals I see may read like this.

"One ladies diamond ring with a one carat diamond surrounded by ten small diamonds with a total weight of about .30cts.

Value $12,000"

When I see one of these appraisals in an insurance replacement scenario I know several things, the first being that there is little chance in a hot place that the stone was worth more than 4 or 5k and often not anywhere near that. The insurance company can replace it with almost anything that they want and there will not be a whole lot the client can do about it, and they sure as heck will NOT be writing any 12,000 dollar checks. The insurance company may spend three thousand on a replacement stone that ironically may actually be better than the one appraised.

However, when an appriasal comes in with all of the requisite information, then the insurance company has all of the information needed to do a proper replacement, and in my experience they are happy to do so when they believe that is what it takes to make their clients whole. I have done insurance replacement work for many years, and have NEVER had an insurance company balk on doing a like kind replacement. The better the information they have the easier it is for them to do their job and the happier they are to do it.

Wink

 

[Rod]

Wink.......question. I''m in the process of having my new ring scheduled and I provided my insurance company, not only the appraisal (which I''m sure is inflated), but I also provided a copy of the GIA grading report for my diamond. If my ring was lost or stolen, since I have full replacement cost insurance, is it safe to assume they would have to replace my stone with a stone of equal value/quality to the stone lost or stolen. Not to mention my setting is a custom made platinum setting and can not be purchased stock.

Thanks for your time.........

 

[WinkHPD]

Rod,

They must replace in like kind, so yes, provided your appraisal has all of the pertinent information, especially the name of the designer and good pictures in case it was a one of a kind piece that he will need to totally recreate or the style number if it is a standard piece for them.

That is the purpose of the appraisal and the insurance, to be sure that you are replace in kind with the lost or damaged property.

Wink

 

[diamondseeker2006]

I also provided the insurance company with my sales receipts, because I wanted to pay the premium based on the real value, not an inflated appraisal value. Why pay an inflated premium when they aren''t going to write you a check for the full insured amount anyway!!!

 

[denverappraiser]

Date: 1/18/2006 8:13:19 PM
Author: dhog

so if I buy a ring for 14,000.00 and had it appraised for
25,000.00 and the person that did the appraisal saw the reciept.
What moral standard did he do me as a consumer
and what ethical standard did he do for the insurance co.
the insurance co. charges me a fee based on his expert
opinion only to say later we can replace it for 14,000.00
so you see WE the CONSUMERS are charged for excess value
that was inflated in the first place.seems to me its just like
life insurance,if you have a loss pay up at face value or get out
of the game.

A potential gain could constitute fraud

If the appraiser determined that the piece could be reasonably replaced with another of like kind and quality for $14,000, they have done you a disservice to give you an insurance replacement appraisal for $25,000 and you would be unwise to solicit a policy based on it. A recent receipt for $14,000 is decent evidence but not necessarily the only issue.

In most cases jewelry insurance does not use the same cash out approach used in most life insurance although policies of this nature are available from several companies. Many customers prefer to go with the replacement type policies because they are much less expensive. That’s why they’re popular. I agree that the defined value policies can be less troublesome at claims time.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[ame]

Mine is branded, the stone is anyway, as well as my wedding ring, and I made sure it was listed in the appraisal AND in the insurance policy.

 

[sfritz]

Wink and Neal have provided excellent direction about insuring branded jewelry. I would point out two things.

1) As a jewelry insurer, we want a detailed description of the jewelry including whether the item is branded and an accurate (not inflated) retail replacement value. If you receive an appraisal that is significantly higher than the price you paid, ask why. If you purchased the item at a close-out sale, then the higher appraised value reflects the cost to replace the item in a regular market.

2) Some jewelers provide the description and retail replacement value in a document called a “jewelry evaluation for insurance” rather than an appraisal. A true appraisal requires comparisons of like items within a market. Often, we receive the jewelry evaluation from the jeweler who sold the item. That is perfectly acceptable to us.

Sue Fritz
Jewelers Mutual Insurance Company