appraisals and insurance

[digger]

Hi everyone,

I''ve heard conflicting things about insurance company payouts and appraisals, and was hoping for clarification.

It seems for the most part, my friend''s stones get appraised at about 2-2.5x the paid price. And insurance premiums are based upon these appraisals.

How do insurance payouts in case of theft etc. work. I was told that the insurance company won''t refund the appraised amount, but instead the fair market value. If this is so, what''s the point of having an appraisal that is so high, which in turn increases premiums on a price you''ll never have returned.

If I''m off here, please let me know.

Much appreciated.

 

[Ideal Diamond Search]

I believe the appraisal should be 25% above price paid.

This is because the insurance company will contact a diamond dealer and ask for a 10 to 20% discount, plus prices of diamonds may increase, therefore you should be covered with 25% above.

This is my opinion.

 

[Richard Sherwood]

Ask the appraiser to appraise the diamond at a low retail value, at which he is comfortable you'll be covered in case of loss, yet not pay unnecessary premiums.

At the same time, ask him to let you know what average and high retail value is, so you'll know where your purchase falls in the entire retail market range for that particular item.

 

[Richard Sherwood]

The way the fine print on most insurance policies reads, the insurance company has the option of replacing your lost gemstone item with another gemstone item of equal quality (or better), instead of giving you cash for the amount insured.

If they are unable to offer you an equivalent (or better) item, then they are obligated to "cash you out" for the amount insured. A one-of-a-kind antique item would often fall in this scenario.

If they can find an equivalent item, yet you refuse to take it for some reason, they have the option of "cashing you out" for the amount which they are capable of purchasing the equivalent item. This is usually in the wholesale plus a small percentage range, which often will be less than the retail amount which you insured it for.

This is usually a "take it or leave it" scenario, because they hold all the cards. Many an insurance client has been surprised by this solution, as they didn't realize the options upfront when they insured the item.

I think the best solution is the approach outlined in the post above.