Appraisal/Insurance confusion

[nobody]

Theoretical Situation "like kind and quality" insurance policy:

Lets say that you purchase a branded superideal stone for $5,000.00 (internet pricing/ christmas sale/ coupon/ etc...a very good price) and than you get a very detailed independent appraisal that appraises that the market retail price is $10,000.00.

Now you lost the ring and have a valid claim for the stone. The insurance company due to the detailed appraisal can not replace with like kind and quality (its a branded super ideal stone) because they only deal with their own jewelers that dont have access to that brand.

I doubt they will cut you a $10,000 check, even though you have been paying the premium for that amount.

What will the insurance company do now? Would they contact your jeweler and find the going price for the branded "like kind and quality" stone and cut you a check for that amount? (Lets say the going price remained approx the same at $5,000)

Remember you have been paying insurance premiums for double at $10,000 because of the independent appraisal and you wanted to protect your purchase from an inferior replacement.

So, Is that high appraisal price actually costing you in insurance premiums? In this theoretical case, Would it be better to let your insurance know that you want the "like kind and quality" stone as detailed in the $10,000 appraisal but want to insure it at your purchase price of $5000?, to save on insurance premiums.

 

[Sparkalicious]

I have no idea, Nobody, however, I would like to know too ... It''s a good question and one I will have to be looking at soon myself ... so ... here''s a *bump* for you so hopefully someone who does know will be able to offer some insight.

 

[denverappraiser]

Your company will first try to replace through their usual system of suppliers. As you point out, they may not succeed. They can also try to replace through the original jeweler or contact the manufacturer, assuming that this applies to what you have, and look for either a direct deal or for another sales agents who will work with them if they think you’re is being unreasonable. If they are unable to meet the ‘like kind and quality’ standard or cannot secure a replacement for less than the policy limit and within a reasonable amount of time, they will cash out for that limit, in your example $10,000. That is, in fact, what that limit is for.

Details are different for every company and there are lots of states with different rules but generally they are agreeing to pay the expenses to replace with like kind and quality or to pay the policy limit, whichever is lower.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

 

[denverappraiser]

The easiest example is highly branded pieces. Class rings come to mind. They are terribly specific and, if it’s been a few years since graduation and the school isn’t one of the majors, they’re often quite difficult to replace.

In the case of a loss, the company will call up the manufacturer and will get a bid to make a new one with the appropriate year and school and get a price. The major manufacturers are actually pretty cooperative about this but it is a little on the expensive side. It’s not out of the question that that they have a 3rd party source who can make a knockoff or some CAD/CAM facsimile for less money and this is where the appraisal comes in. Is it defined as a genuine Balfor or will any old ring that says ‘Podunk High 1951’ on it meet the description?

What if the manufacturer wants more to replace than the policy limit? What if the manufacturer is out of business or unavailable? What if they simply refuse to do the work? That’s when you start a negotiation. They can offer you an alternative manufacturer or even alternative product entirely. Wouldn’t a pair of earrings worth the same amount be nice instead? If you agree and accept their offer than the deal is done so let’s assume that you don’t agree. You want a class ring, you want one just like what was lost and it IS possible to do it. If they don’t do it, you have a legal case against them and most companies with sense would rather pay you than to lose a case. They owe you a ring. If it’s possible, but it will cost them more than the limit of the policy, they’ll cash out the policy. If it’s not possible, and they can’t produce an alternative that meets the description then they will cash out the policy.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

 

[nobody]

I know your not an insurance, so they are the only ones that have the final say.

Quote:

"If they are unable to meet the ‘like kind and quality’ standard or cannot secure a replacement for less than the policy limit and within a reasonable amount of time, they will cash out for that limit, in your example $10,000. That is, in fact, what that limit is for."


Would they really cut me $10,000 policy limit if the replacement "like stone" could be verified by my jeweler for $5,000? (Just because my jeweler is not one of their network jewelers) All it takes is a phone call from the insurance to the jeweler to find out the price. I would think they would only cut me $5,000 as that is the market price from my jeweler, making my insured value at $10,000 just costing me insurance premiums.

I am just curious as how to insure in this situation.

Wondering if its possible (or if anyone has done this) is to submit the Appraisal and Purchase Price to the insurance, and inform them that you want to insure for the purchase price with the specifications from the appraisal.

That leads me to, Do you really need an independent appraisal for insurance purposes with a branded super ideal stone?

 

[denverappraiser]

If it’s available at your jeweler for $5k, this is what they will value the loss at unless your maximum limit is below this. If it’s available through their alternative sources for less, it’ll be less. I can think of no situation where they will pay more for a branded item than the brand is actually charging. Insurance companies hire some pretty savvy shoppers.

If the selling jeweler provides you paperwork with a complete and accurate description on a new sale item that they are able to replace along with a realistic valuation (all of which is effectively a detailed sales receipt), and you have no questions where you either are looking for additional information or are questioning something that your jeweler told you or didn’t tell you, then you have no insurance need for an independent appraisal on a new purchase.

If you believe the value conclusion on your appraisal to be inaccurate, call up your appraiser and ask them to defend their position.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

 

[oldminer]

Some branded super ideal cut diamonds are simply finely cut diamonds. There are some diamonds also called super ideal cuts which have minor special brand characteristics which differ only a little from standard cutting. Only a few super ideal cut brands have characteristics of cutting substantially different than other finely cut diamonds. When you insure for like kind and quality replacement it takes the unusual or normal nature of the product into account automatically. If you have sufficient insurance for a current replacement, even if the insurance company agrees to let you purchase a new one directly from the original seller, you will probably have enough coverage if a $5,000 diamond has $10K insurance on it. Probably, you are over insured.

Let's say you own this very special and unusual diamond branded diamond for 2 years and the asking price has gone from $5,000 to $6,400 for the stone. An insurance company is way smart enough to replace it for you at a $6,400 cost rather than issuing a direct cash payment for anything like $10,000. Even if they overpay, or find it difficult to buy directly they will consult with you and you can make the replacement.

If the brand is totally out of the market, then they will offer you several branded, finely cut, alternative diamonds per the fine print in most policies and by that time you'll be glad enough to take your choice. The alternative to not settling a claim in a reasonable manner is often a lawsuit. They can choose to pay you a check, but it is totally up to the insurance folks to do this. They have lawyers on retainer and strive to make a profit. It will take years, attorney costs and you have no diamond all that time. Making a fair settlement is a strong favorite choice for most consumers.

Insurance does not cover sentimental attachment or the feeling of loss. It is a material replacement for the monetary, physical loss. It isn't a perfect way to make you whole. Insure things for reasonable amounts as a safeguard for their material replacement. Don't count on inusrance to make you feel good because it rarely does a good job.

 

[hoorray]

I told my insurance company what I paid and we agreed on a valuation a little higher that allowed for inflation and/or not being able to find a comparable deal, etc. Recently I called and upped the insured value by 5% (which was the max they would allow without another appraisel) since diamond prices have gone up in the 5 years since we bought it. Insuring for the retail appraised value would not get me the cash for that amount from my insurance company. (USAA). My diamond is a super ideal, but not branded.

 

[Kissmark]

Hi I''m not sure if I''m answering your question, but I think with some insurance, like Chubb, if anything happens to the ring, they will give out cash payment of the insured amount. so you can just take the cash and purchase the same ring from the same vendor as you did before

 

[stebbo]

Thoughtful questions nobody, and something that insurers have different opinions on:

JM insure at the appraised value.
Gemshield insure at the receipted value.

JM - well you're going to be wastefully overinsured unless you get a real appraisal.
Gemshield - doesn't leave any room for inflation, price fluctuations, initial discounts, store closing down, and sales tax if you didn't originally pay it.

What lop did I think makes the most sense, if acceptable to your insurer (as USAA are set up slightly differently).

If the insurer insists on insuring at the appraised value, then I guess you'll need an 'appropriate appraisal'. So question for Neil - someone comes to you with something available from one online location only, say an ACA. If someone was quite confident Whiteflash are going to be around for a long time to come, would you (upon request) value that stone with the replacement market being Whiteflash only?


(Kissmark: 'nobody' was asking about the common 'like kind & quality' replacement policies. Chubb's is an agreed-value policy in case you're wondering what we'll all talking about.)