Insurance
- Thread starter f0rbidden
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If you are dealing with a Jewelers Mutual insured jeweler you can insure with JM at a very reasonable rate and if the item is lost, damaged, stolen, or even gone via mysterious dissapearance it is fully covered. JM will send you back to the insuring jeweler for coverage, or to another JM covered jeweler in the event that your previous jeweler of choice is not longer your jeweler of choice. When the loss occurs you get a matching quality item as a replacement, but you do NOT have the option of taking the cash. I think you may even be able to get coverage if your jeweler is not covered by JM by going to their website, but I am not sure about that.
Chubb will write you a replacement cost policy. It will be a bit more expensive, but when a loss occurs they write you a check and you decide what to do with the money. Many people like that option and are prepared to spend more for their premium to have that ease of replacement or not replacement.
Most home owner''s/renter''s policies will allow you to get a rider for your jewelry and will have no or very limited coverage without it. The main dissadvantage to my way of thinking is that if there is a loss they will often require you to get two or three bids and then will send you to the jeweler with the lowest bid. There are ways around this in some states, but it is not in your best advantage to be sent to the lowest bidder if you have a truly unique diamond, say one of the branded super ideals which the lowest bidder may not have access to. You will want to be sure that you have a VERY detailed and complete appraisal with any of the three methods of coverage, but especially with a rider type policy as you will only get what they HAVE to get you.
Wink
Chubb will write you a replacement cost policy. It will be a bit more expensive, but when a loss occurs they write you a check and you decide what to do with the money. Many people like that option and are prepared to spend more for their premium to have that ease of replacement or not replacement.
Most home owner''s/renter''s policies will allow you to get a rider for your jewelry and will have no or very limited coverage without it. The main dissadvantage to my way of thinking is that if there is a loss they will often require you to get two or three bids and then will send you to the jeweler with the lowest bid. There are ways around this in some states, but it is not in your best advantage to be sent to the lowest bidder if you have a truly unique diamond, say one of the branded super ideals which the lowest bidder may not have access to. You will want to be sure that you have a VERY detailed and complete appraisal with any of the three methods of coverage, but especially with a rider type policy as you will only get what they HAVE to get you.
Wink
Thanks, Wink, for explaining the insurance options. I have one clarification. With Jewelers Mutual, you can go to the jeweler of your choice (in the U.S.), regardless of whether that jeweler is insured by Jewelers Mutual. Usually, our insureds return to the jeweler who sold them the item or provided the insurance appraisal/valuation. If you've moved - or no longer wish to use your original jeweler - you can choose another jeweler.
Sue
Jewelers Mutual Insurance Company
LaserLady
Rough_Rock
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- May 18, 2004
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One last thing to add to the previous posts. Please keep in mind, I am in Texas so the advice I have involves rules involving policies in Texas. Although, other states may handle policies and claims the same way.
When insuring jewelry always ask these questions.
Can I insure the piece for LESS than what it is appraised for?
Many times we receive appraisals for full retail. All the time knowing that we didn''t pay anything near that amount. Many insurance companies will allow you to declare a lower value for your coverage. With the understanding that if you declare the insured value to be $5,000, but the actual replacement cost is $7,500. They will only cut you a check for $5,000. So if your comapny allows you to declare a lower value, don''t go so low that you are not properly covered in the case of a loss.
How are things handled if there is a full loss, partial loss, or damage?
Full loss - *poof* ring is gone
Partial Loss - ring is here but centerstone is gone
Damage - ring is here, centerstone is here, but nothing is where it was when I bought the ring.
Is the policy written as (what I refer to as) a cash policy or a replacement policy?
A "cash policy" is one where they simply cut you a check for the insured amount in the event of a loss. This is NOT how most insurance companies will do business. The problem with this sort of policy is that someone might intentionally grossly over-insure a piece of jewelry with the intention of losing it, and the insurance company is the one left getting the short end of the deal. (i.e. paying a $50,000 claim on a $10,000 piece). Keep in mind, the representative taking the information for the policy more times than not knows very little about jewelry. So it is easy to see how someone could get away with this.
A "replacement policy" (most common) is one where, in the case of a loss, you receive a check for what it would cost to currently REPLACE that exact piece of jewelry no matter what it is insured for. Let me repeat....The issue here is that no matter what you have it insured for, you will only receive a check for the current replacement cost. SO.....if you paid $10,000 for the ring and have it insured for $18,000. You will be paying the premium for $18,000, right? It get''s lost.... The insurance company will cut you a check for let''s say $12,000 even though you have it insured for 18. If they can buy that exact piece, same color, same clarity, same cut, same "quality" for 12,000 then that is all they have to pay you....or, of course, you can have them simply replace the piece no matter the cost. It get''s quite confusing for some people to understand. This protects the insurance company but in a way it protects you too.
I don''t work for an insurance co, but I stayed in a Holiday Inn last night. (just kidding, I had a flashback of that silly holiday inn commercial). As I said, I don''t work for an insurance co. but I do my best to help people understand how the insurance industry works. In the case of jewelry policies and losses the insurance industry, as a whole, is not out to hurt you or take advantage of you. The best way to take care of yourself is to take time to ask questions and undertstand the details.
I always try to make sure that my friends and clients understand their policy and how it works. I hope this helped.
Nancy
VeraScribe, inc.
Houston, Tx
When insuring jewelry always ask these questions.
Can I insure the piece for LESS than what it is appraised for?
Many times we receive appraisals for full retail. All the time knowing that we didn''t pay anything near that amount. Many insurance companies will allow you to declare a lower value for your coverage. With the understanding that if you declare the insured value to be $5,000, but the actual replacement cost is $7,500. They will only cut you a check for $5,000. So if your comapny allows you to declare a lower value, don''t go so low that you are not properly covered in the case of a loss.
How are things handled if there is a full loss, partial loss, or damage?
Full loss - *poof* ring is gone
Partial Loss - ring is here but centerstone is gone
Damage - ring is here, centerstone is here, but nothing is where it was when I bought the ring.
Is the policy written as (what I refer to as) a cash policy or a replacement policy?
A "cash policy" is one where they simply cut you a check for the insured amount in the event of a loss. This is NOT how most insurance companies will do business. The problem with this sort of policy is that someone might intentionally grossly over-insure a piece of jewelry with the intention of losing it, and the insurance company is the one left getting the short end of the deal. (i.e. paying a $50,000 claim on a $10,000 piece). Keep in mind, the representative taking the information for the policy more times than not knows very little about jewelry. So it is easy to see how someone could get away with this.
A "replacement policy" (most common) is one where, in the case of a loss, you receive a check for what it would cost to currently REPLACE that exact piece of jewelry no matter what it is insured for. Let me repeat....The issue here is that no matter what you have it insured for, you will only receive a check for the current replacement cost. SO.....if you paid $10,000 for the ring and have it insured for $18,000. You will be paying the premium for $18,000, right? It get''s lost.... The insurance company will cut you a check for let''s say $12,000 even though you have it insured for 18. If they can buy that exact piece, same color, same clarity, same cut, same "quality" for 12,000 then that is all they have to pay you....or, of course, you can have them simply replace the piece no matter the cost. It get''s quite confusing for some people to understand. This protects the insurance company but in a way it protects you too.
I don''t work for an insurance co, but I stayed in a Holiday Inn last night. (just kidding, I had a flashback of that silly holiday inn commercial). As I said, I don''t work for an insurance co. but I do my best to help people understand how the insurance industry works. In the case of jewelry policies and losses the insurance industry, as a whole, is not out to hurt you or take advantage of you. The best way to take care of yourself is to take time to ask questions and undertstand the details.
I always try to make sure that my friends and clients understand their policy and how it works. I hope this helped.
Nancy
VeraScribe, inc.
Houston, Tx
f0rbidden
Shiny_Rock
- Joined
- Feb 17, 2006
- Messages
- 318
Thank you LL for your explanations! That certainly did help...the puzzle of insuranceis almost as confusing as the puzzle of finding the right diamond to begin with - who knew this could be so complicated!
Thanks everyone for your suggestions! I''m researching away!
Thanks everyone for your suggestions! I''m researching away!
- Joined
- Jul 21, 2004
- Messages
- 9,150
Nancy,
I think you may be on thin ice here. The company may be able to make the argument that since the replacement cost of the ring is $7500, and you deliberately underinsured for $5000, you are 1/3 self insured and that they are only responsible for 2/3 of the loss. This would be a check for $3330, not the expected $5k. Even worse, they may determine that you’ve substantially misstated a material fact on your application and disallow the claim entirely. By all means, discuss it with your insurance agent. This sort of rules can vary drastically from company to company, from state to state and even from policy to policy. They are NOT all the same and it’s good to make sure you understand your own policy.
Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver
LaserLady
Rough_Rock
- Joined
- May 18, 2004
- Messages
- 29
...So if your comapny allows you to declare a lower value (lower than full retail), don''t go so low that you are not properly covered in the case of a loss....
...In the case of jewelry policies and losses the insurance industry, as a whole, is not out to hurt you or take advantage of you. The best way to take care of yourself is to take time to ask questions and undertstand the details. ...
No thin ice here. Just using imaginary numbers to express an option that some insurance companies offer. But thank you for pointing out an avenue that some insurance companies might pursue.
Nancy
...In the case of jewelry policies and losses the insurance industry, as a whole, is not out to hurt you or take advantage of you. The best way to take care of yourself is to take time to ask questions and undertstand the details. ...
No thin ice here. Just using imaginary numbers to express an option that some insurance companies offer. But thank you for pointing out an avenue that some insurance companies might pursue.
Nancy
jasontb
Shiny_Rock
- Joined
- Feb 10, 2006
- Messages
- 226
I just bought the stone for my gf''s engagement ring. It will not be insured. Maybe on renters insurance if it''s *really* inexpensive. Otherwise not. I don''t believe in insurance. It''s a scam. I think the only time insurance (of *any* kind) makes sense is if you cannot afford to cover the costs should the even in question take place.
For instance. If she looses the ring, I can afford to replace it. So paying 2% or whatever sombody like Chubb charges is crazy.
But if I were to be in the hospital for 3 weeks on a lung machine, I could not afford it. So I have major medical insurance. But I won''t have jewelry insurance.
For instance. If she looses the ring, I can afford to replace it. So paying 2% or whatever sombody like Chubb charges is crazy.
But if I were to be in the hospital for 3 weeks on a lung machine, I could not afford it. So I have major medical insurance. But I won''t have jewelry insurance.
FireGoddess
Super_Ideal_Rock
- Joined
- Jan 25, 2005
- Messages
- 12,145
As long as you can afford to replace it, it''s all good.
I can''t, and that''s why I have insurance.
f0rbidden
Shiny_Rock
- Joined
- Feb 17, 2006
- Messages
- 318
I''m sorry for being ignorant here, but why would you opt NOT to insure something that is valuable?
I guess in my mind, if I put out 8 or 10k for a diamond, I want to be comfortable wearing it knowing that if something happens and the stone randomly falls out of the setting while I''m walking down the street that it will be replaced without my having to put out another 8 or 10. My understanding from my renters'' insurance company is that it will cost approximately $150 per year to insure the diamond/ring in case anything happens to it -- so forgiving inflation or value increases, it would take 53+ years to pay out the same amount in insurance as it would take to replace the diamond - is that right?
I guess in my mind, if I put out 8 or 10k for a diamond, I want to be comfortable wearing it knowing that if something happens and the stone randomly falls out of the setting while I''m walking down the street that it will be replaced without my having to put out another 8 or 10. My understanding from my renters'' insurance company is that it will cost approximately $150 per year to insure the diamond/ring in case anything happens to it -- so forgiving inflation or value increases, it would take 53+ years to pay out the same amount in insurance as it would take to replace the diamond - is that right?
I think you may be on thin ice here. The company may be able to make the argument that since the replacement cost of the ring is $7500, and you deliberately underinsured for $5000, you are 1/3 self insured and that they are only responsible for 2/3 of the loss. This would be a check for $3330, not the expected $5k.
Denver Appraiser, I''m confused isn''t $5,000 2/3 of a $7500 loss? $3330 is 2/3 of the insured value.
Denver Appraiser, I''m confused isn''t $5,000 2/3 of a $7500 loss? $3330 is 2/3 of the insured value.
- Joined
- Jul 21, 2004
- Messages
- 9,150
Insurance is, by definition, betting against yourself. The insurance companies are in the business of estimating risks and spreading out those risks amongst their many policyholders with money left over at the end to pay their expenses and stockholders. I agree with the above posters that, if you can afford to take the loss, it’s financially better in the long term to simply avoid the insurance entirely and pay for your losses yourself because you then don’t have to pay for your share of the insurance company. This is known as ‘self insurance’ and is often a fine choice.
The problem I’m mentioning above is one of the details in the contract. By and large, I agree with what LL has said with the exception of the comment about deliberately insuring for less than replacement cost as a way of maximizing the value of your insurance contract. I’ll explain.
With most replacement type policies, which is most jewelry policies, the company agrees to replace an item with another of like kind and quality in the case of a loss. If the client prefers to be paid in cash, they will pay the amount it would have cost them to make the replacement. The major exception to this is if the face value of the policy is less than the cost of replacement, in which case they will cash out for the face value of the policy.
Given this environment, it actually makes a certain weird sense to underinsure your property. Let’s use LL’s sample numbers. You’ve got a ring where it will cost the company $7,500 to exact replacement. If you submit an appraisal that values it at $18,000, the company will probably accept it and you will pay a premium based on $18,000, even though the maximum payout in the case of a loss is actually $7,500. Obviously you are not getting anything of value for the premiums you are paying for that ‘extra’ $10,500. The behavior of the company at claims time will be the same if your appraisal had been $7,500 and your premiums would have been far less. This is the substance of LL’s post and I absolutely agree with her.
The other primary type of jewelry policy is a defined value or cash value policy. If you have a loss, the company will pay you a defined amount and you can do with the money as you wish. These are popular for obvious reasons but there’s a serious drawback. These policies are more expensive, sometimes a lot more expensive.
Here’s the tricky part. An underinsured item on a replacement policy is, in effect, strikingly similar to a cash value policy for the full face value at the replacement value policy price with you ‘self-insuring’ the balance! This is the thin ice I was referring to.
The people who write these contracts aren’t fools and they’ve put a lot of thought into this sort of thing. If you are only insuring 2/3 of the value and the payout is defined by replacement cost, it’s reasonable for them to decide that they are only responsible for 2/3 of the loss with you self-insuring the remaining 1/3. Right? If, at the time of the loss, the bid for replacement comes in at $5,000, they would only be responsible for 2/3 of that.
In practice, I also agree with LL that most insurance companies are interested in treating their clients fairly and unless they determine that you and/or the appraiser are deliberately misstating the facts, they would be unlikely to make such a decision. If you want a cash value policy, buy one and pay the necessary premiums. If you want a replacement policy, buy one and submit an appraisal that provides a budget that fits the nature of the policy. In all cases, read the policy and see what the rules are. They are not all the same.
Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver
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