Inflation/Appreciation Insurance coverage

[MellowCat]

I am getting my ring insured and have the option to add inflation coverage. The ins. agent said the ring would appreciate over time. Do diamonds and/or jewelry generally appreciate? What about wear and tear? The ring isn''t going to get less "used" over time, so how does this work, exactly? Is the extra coverage worth it?

 

[Rod]

Diamonds definitely increase in value over time. Recently, there supposedly an increase in diamond prices, which would translate to increased value for everyone who purchased before prices went up. So, it stands to reason that your purchase will over the years appreciate, which is one reason people believe diamonds are good investments. Not just in the pleasure sparkle gives, but financially.

 

[bar01]

Some points to consider too -


1) What are you using for the amount to be insured? Was it based on an good independent appriasal?

2) Even with inflation adjustment - you may want to have it reappraised every so many years, to check on its condition and its current value - and adjust your coverage.

 

[MellowCat]

Date: 1/7/2006 6:36:25 PM
Author: Rod
Diamonds definitely increase in value over time. Recently, there supposedly an increase in diamond prices, which would translate to increased value for everyone who purchased before prices went up. So, it stands to reason that your purchase will over the years appreciate, which is one reason people believe diamonds are good investments. Not just in the pleasure sparkle gives, but financially.

Ok, thanks for the info. I really thought they stayed about the same in value. Why, I don''t know.

 

[MellowCat]

Date: 1/7/2006 6:47:17 PM
Author: Bertrand
Some points to consider too -


1) What are you using for the amount to be insured? Was it based on an good independent appriasal?

2) Even with inflation adjustment - you may want to have it reappraised every so many years, to check on its condition and its current value - and adjust your coverage.

1) Yes. The actual appraised value is what the carrier will "cut the check for" should something happen to it.

2) This makes sense.

 

[Richard Sherwood]

I once did a study on the yearly rate of appreciation of wholesale diamond prices.

The study ranged from 1948 to about 2000, and the average rate of increase was 5.75%.

 

[Lynn B]

Date: 1/7/2006 6:36:25 PM
Author: Rod
Diamonds definitely increase in value over time. Recently, there supposedly an increase in diamond prices, which would translate to increased value for everyone who purchased before prices went up. So, it stands to reason that your purchase will over the years appreciate, which is one reason people believe diamonds are good investments. Not just in the pleasure sparkle gives, but financially.

Actually, it has always been my understanding that in reality, diamonds are not considered a "good investment". Sure, the prices keep on going up, up, up... but if you ever needed to sell one, it is highly unlikely you will get your money back out of it. I mean, I guess you could get really lucky, and find that one perfect *buyer*... but that really doesn''t seem to happen very often. A diamond is a luxury purchase... buy one because you love it, but don''t expect it to earn you any money!

 

[Gonzodogg]

Date: 1/7/2006 9:10:08 PM
Author: Richard Sherwood
I once did a study on the yearly rate of appreciation of wholesale diamond prices.

The study ranged from 1948 to about 2000, and the average rate of increase was 5.75%.

YEARLY?!

 

[jaz464]

Just about everything goes up in price over time. So if you were to lose your diamond, it would cost more to replace it today than it would have when you first bought it.

 

[Modified Brilliant]

Date: 1/8/2006 3:20:01 AM
Author: Gonzodogg

Date: 1/7/2006 9:10:08 PM
Author: Richard Sherwood
I once did a study on the yearly rate of appreciation of wholesale diamond prices.

The study ranged from 1948 to about 2000, and the average rate of increase was 5.75%.

YEARLY?!

The highest percentage increase took place in August 1978 (30%). The following year the increase was 13%.
From 1990-2004, the average increase annually was around 4%. Richard is correct for the longer span of time (5.75%).

Here''s the cool number..a diamond purchased in 1949 for $100.00 was worth $2,636.00 in 2004. (wholesale). The cumulative percentage increase was 2,536%.

Note that these numbers are approximate, gathered from research info that I have.


www.metrojewelryappraisers.com

 

[TheDoctor]

Most would agree that insurance companies need to know approximate values of jewellery/diamonds so that they can determine how big a premium they can smak you with. The important consideration is that the values expressed in appraisals reflect the highest retail amount which the purchaser could have paid, not the actual purchase value.

This is where the insurance companies have an advantage. If the premium is based on replacement cost of a hypothetical $10,000.00 diamond ring, and the ring is lost or stolen, the insurance company NEVER writes a cheque for $10,000.00
They base their settlement on around three estimates for replacement of an equivalent piece of jewellery by jewellers that you have to contact with your appraisal info. You do the legwork. Sometimes they have a jeweller in their pocket, so to speak, who will offer to replace the ring for $6500.00, and they negotiate back to that amount for your settlement.Then, they reduce that further by subtracting your deductable.

For this behaviour alone, insurance companies are allocated their own special section in hell.

In most cases, you are better served by askng your appraiser to evaluate your jewellery based on current market conditions, not what the piece would cost at full retail in an upscale shop on Fifth Avenue. On expensive pieces, the difference in premium costs between appraised value and actual replacement price can be staggering.

 

[Dee Jay]

I actually had a very positive experience with my insurance company (Travelers) back in 1999. In the course of moving I lost my engagement ring. I made a claim and they sent me a check for MORE than the insured amount (I don't remember the exact rational--it was 7 years ago--but I think it had to do with appreciation). A few days later I found my ring in the bottom of a suitcase and sent the check back to the insurance company (which was quite an adventure--they didn't know how to take a payment back). So maybe different insurance companies handle things in different ways e.g., maybe some factor in appreciation? (I do have to mention that they did offer to have the ring replaced for me using one of the jewelers that they work with but when I said "no" they just sent the check.)

Edited to add: In rereading the original post, I must have the inflation coverage without evening knowing it on my policy.

 

[denverappraiser]

As much as it pains me to come to the defense of the insurance companies for this policy, they have pretty good reasons for doing it.

Insurance fraud is a terrible problem for them. Their clients will often claim that the damages that they have suffered in a claim are considerably higher than the actual loss. It’s appropriate and reasonable that they try to limit this behavior. Since they have never seen the item, they are relying entirely on the opinion of an appraiser, and this appraiser was chosen solely by the client (who may be relying entirely on the seller and even submitting paperwork that was prepared by the seller). This submitted opinion is often completely unreasonable. What would you have them do? Again, they’ve never seen the piece. In the case of real estate and other high value property, they will often have their own inspectors examine it but this would drastically drive up the cost of jewelry insurance on anything but the most expensive pieces. Paying out whatever amount is requested based on whatever the seller said is the road to bankruptcy. The compromise is this ‘like kind and quality’ business where the payout is based on the description, not the price. In the case of clients who submit sensible appraisals, this is fair to both parties.

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

 

[MellowCat]

For this behaviour alone, insurance companies are allocated their own special section in hell.



***Truer words were never spoken.

 

[MellowCat]

Date: 1/8/2006 10:51:50 AM
Author: Dee Jay
I actually had a very positive experience with my insurance company (Travelers) back in 1999. In the course of moving I lost my engagement ring. I made a claim and they sent me a check for MORE than the insured amount (I don''t remember the exact rational--it was 7 years ago--but I think it had to do with appreciation). A few days later I found my ring in the bottom of a suitcase and sent the check back to the insurance company (which was quite an adventure--they didn''t know how to take a payment back). So maybe different insurance companies handle things in different ways e.g., maybe some factor in appreciation? (I do have to mention that they did offer to have the ring replaced for me using one of the jewelers that they work with but when I said ''no'' they just sent the check.)

Edited to add: In rereading the original post, I must have the inflation coverage without evening knowing it on my policy.

I have read that Chubb automatically adds some type of appreciation to their policies, yours may have been similar to that. I had to specifically request "yes" or "no" to that type of coverage w/State Farm and just wondered if it was necessary. The Forum has spoken.

Your carrier should have given you a big discount for being so honest! They prolly thought "How very Flanders of her" when you tried to return the check. LOL