Appraising Diamond for Insurance - Inflated Value?

[D_]

Hello Fellow PSers,

I have a question about appraisal values. My understanding is that it is common to have inflated appraisal amount and the insurance will be based on that amount versus actual value of the diamond.

I think Diamondseeker mentioned somewhere that she recommends telling the appraiser what we paid and that we do not want an inflated appraisal.

What I'm wondering is how the insurance company will look at that if -God-forbid- we'd like to file a claim?

E.g.
Say the actual price $5,000.
Usually it may be appraised for 8k.
The insurance company knows this and applies a discount to the appraisal value and will try to find something that cost 4-5k.

If the appraisal value is 5k for a 5k ring then won't the insurance company consider 5k as the inflated value and thought that the actual retail value in the neighbourhood of $3k or even lower?

Thanks for the input.

 

[diamondseeker2006]

Nope, the insurance can easily see that retail for diamonds with your specs are $5k and they will be getting the diamond at a discount for less than that. So basically all you'd be doing is overpaying your premiums. The insurance does not care if your insurance valuation is $10k, they are still going to replace with a diamond having the same specs and they'll pay less than normal retail, more like maybe $4k or so.

If you have a GIA XXX, 1 ct, I SI1, that is what they'll replace it with.

 

[D_]

What if you are getting the diamond overseas where it costs you 5k, but it'll cost 8k to replace from local vendor?
Won't saying that you only paid 5k put you at disadvantageous position (say 5k - or worse, 4k will only get you GIA XXX .7 I SI1 locally)?
Or that doesn't matter and they will still replace it with a diamond with similar specs (say in this case GIA XXX 1c H SI1)?

 

[denverappraiser]

What the insurance company is normally agreeing to do is to replace a lost or destroyed item with another of 'like kind and quality', or words to that effect. They are using the description and photographs from the appraisal to make the determination of what this is. This is the reason they're asking for paperwork from you up front. As pointed out above, they hire full time skilled shoppers to do this and they're pretty good at hunting out a bargain. They mostly don't use local stores but when they do they'll pound them pretty hard on the prices. Insurance companies make for pretty good customers, they know it, and they use their buying power to keep the prices down.


Generally speaking, the cheapest place in the world to buy diamonds is the US so it depends on where you mean by overseas, but if they can't replace or repair the piece for less than the policy limit, they'll cash it out at the limit. Rules on this vary. It doesn't really matter to them how the appraiser got to their conclusion or how much you paid.
.

 

[D_]

Thank you, both!