Insurance - price paid vs. appraised value.

[sixstrrzr]

My insurance co. has told me they must insure my diamond ring based on either price I paid or appraised value(as a scheduled rider to my existing policy).

My appraiser said I should insure for maybe 10-15% over what I paid, as that is all I would get in the event of a loss.


Is this unusual for an insurance company to not allow me to insure for a numeric value I pick?

The difference between appraised value and purchase price is significant, in my case.

Or should I look around for a seperate policy for the diamond itself?

 

[strmrdr]

My rule of thumb is insure for cost + 30% review every 3 years.
If you appraiser says to insure it for that amount Im rather confused as to why the appraisal does not have that amount on it.
A feel good appraisal is less than useless.

 

[sixstrrzr]

Thanks for the reply - I am confused by the term "feel good appraisal".


RE value - that''s what I am trying to do...pick the level of coverage I want....

I have no doubt I could get a similat diamond tomorrow for 10-15% over what I paid for my current diamond.

It seems a waste to buy coverage level based on appraised value - Ins. Co, would not pay the appraised value.

 

[strmrdr]

A feel good appraisal is a high appraised value to make you feel good about the purchase and the number has very little to do with real world pricing.

A ring bought for $199 appraised for $1000 is one example.
The ring will never actualy be worth $1000 likly in the next 50 years.

 

[denverappraiser]

When examining an appraisal value, it’s important to understand what question was being answered by the appraiser. ‘What is this worth?’ can mean quite a variety of things ranging from ‘What would Tiffany &Co. in Bahrain charge to custom make something that looks like this?’ to ‘What should I expect a pawn shop to give me for it?’ Both are valid enough questions and there are an enormous number of other variations. They have vastly different answers. Often sellers will supply an appraisal that is describing a market that is closer to the former than the later as a way of suggesting that you are getting a particularly good deal by shopping with them.

For insurance purposes, you want an appraisal value that will sufficiently fund the insurance company to replace your item with another one of like kind and quality in the case of a loss. In your instance, this seems to be pretty clearly 10-15% over your cost.

Neil Beaty
Independent Appraisals in Denver

 

[Regular Guy]

In my case, my insurer would only go with appraised value, so I didn''t have the two options you mentioned.

And, my appraiser was also only going to give her appraised value, based on what she thought it should be, too -- understanding (at least generally) it was for the purpose of securing insurance, later.

Given your appraiser''s comments, Sixstrrzr, perhaps you can just ask them to write a second appraisal for the amount they also recommended to you, that you insure it for.