appraisal and Insurance coverage for ring with a chip

[krblouisville]

Hi,

I am recently engaged. We had my deceased grandma's 1.3ct center stone set into a newly designed setting, it's about 2 months old. It appraised at $17k. Got Insured through State Farm personal article policy. The appraisal report points out the chip. It was sustained by my grandma when she fell many years back in a dementia facility. It is set so well you don't even see the chip, no damage to diamond or concern for cracks. Brand new setting.

Now that my local insurance guy sent in the appraisal to the corporate office, I received notice my insurance is cancelled in a week due to the chip.

What do I do? How can I get covered? So nervous now that it is going to be lost or damaged without coverage. It's a gorgeous ring.

Thanks so much!!

 

[diamondseeker2006]

Okay, first question is, who appraised the ring and what did they say for diamond specs? Does the diamond itself have a GIA report? Also, what kind of setting is it? I am trying to see if your appraisal is overly inflated before you seek another policy.

Then I will tell you to try Jewelers Mutual Insurance which is a standalone jewelry policy. I just don't want you to overpay premiums.

 

[krblouisville]

Hi! Thanks for your help!

I paid for the appraisal at Jared but it was conducted through an independent appraisal company, Heritage Appraisers. I had to pay for the appraisal purely for insurance coverage since it didn't come with the ring, being that we had the setting custom made. The diamond itself does not have GIA, or if it did that died with my Grandma many years back. That said, center stone appraised at $15k, 1.31 ct, I - VSI 1, table 64%, slight chip at 10 o'clock position. This appraisal for the center stone is in line with the first appraisal I had in 2009 when I inherited it,in original tiffany style setting.

New setting is a halo style, but not the typical you see. More like a flower petal effect. 12 diamond stones surround it, in 2 alternating sized stones. Then, 16 micro (.0 full cut diamonds set on a very thin band.

Does that help?

 

[denverappraiser]

Talk to your appraiser about it. Their contact information should be within the report itself. Call the appraiser who signed the report, not the store that sold the job.

The insurance underwriters don’t like the word ‘chip’ even though it’s an entirely reasonable and even common inclusion to find in diamonds. That’s GIA lingo and GIA sees it as part of the clarity grade while the underwriter is seeing it as pre-existing damage and a risk factor for future problems. Given that the grader still gave it a VS-1 clarity, we must be talking about a pretty small feature and perhaps ‘nick’ or 'abrasion' is a more accurate word. The difference between those is a judgment call by the appraiser. Only they can tell you why they chose to call it a chip. In any case, the insurer certainly has the right to refuse coverage for any reason they want, including particular inclusions or any other gemological property, and you have the right to take your business elsewhere. It’s not like they lack competitors.

They may be unhappy about the appraisal for other reasons as well. $15k for a 1.31/I/VS1 is pretty steep even without damage issues. If they think it’s really an I-1 because of the chip, they're probably seeing it as overvalued and increasingly they find this to be a sign of trouble even though they get to collect higher premiums for it. Inflated values tend to encourage claims and customers often have unrealistic expectations about how the claims process works. The end is a lot of work and they still have unhappy clients. It's easier to just decline the whole thing up front. Often they're pretty good about telling what their problem is if you ask. Start with your agent. Don't be shy about asking them. This sort of question is WHY you have an agent in the first place.

 

[krblouisville]

Thank you. Should I take it to Jewelers Mutual for coverage? It's unlikely I'm going to get the appraiser to remove the chip note in the appraisal. She didn't even notice it given the way it is set, I am the one who told her it was there. And then she had to look for a while under the microscope to find it.

I've called my insurance agent back and he was less than helpful, basically saying it's up to the underwriters. Very disappointed in them.

I don't know where to go to get it covered.

 

[krblouisville]

Update. I called Jewelers Mutual. So far they have given me a quote, and at the same rate as State Farm with full disclosure of the chip. Hoping they don't deny it when they process the appraisal. Fingers crossed X.

 

[denverappraiser]

Thank you. Should I take it to Jewelers Mutual for coverage? It's unlikely I'm going to get the appraiser to remove the chip note in the appraisal. She didn't even notice it given the way it is set, I am the one who told her it was there. And then she had to look for a while under the microscope to find it.

I've called my insurance agent back and he was less than helpful, basically saying it's up to the underwriters. Very disappointed in them.

I don't know where to go to get it covered.

It most definitely is up to the underwriters, and they are in no way required to talk to you about their thinking. If you find that they are treating you poorly or just leaving you in the dark, I again remind you that they have competitors and this is probably not the only business you have with them.

Once again, the difference between a chip and a nick has to do with a judgement call by the grader. That's part of what you hired her to do and she is certainly under no obligation to agree with you. In fact she's under an obligation NOT to just do what you want because you want it. Then again, it doesn't hurt to ask her to explain her position.

JM hires a fair number of GG's on their staff and they may understand the language a bit better than the average underwriter but they will have the same issue if they take it to mean pre-existing damage.

FWIW, if it *IS* pre-existing damage that's not properly described as part of the clarity grade or that it represents an increased risk for future problems, they're right to decline you.