Question on insurance claims and super ideal cuts

[ggeorge]

I've been reading about insuring a ring and wanted to check the following hypothetical example with the pricescope community.

Suppose a ring and setting is purchased for a cash value of $10,000 and insured for that amount. The ring includes an AGS triple zero "super" ideal cut diamond (e.g. Whiteflash ACA, BGD, etc).

Suppose diamond+gold prices stay unchanged so that $10,000 spent today is worth $10,000 in the future.

In the event that it gets lost and an insurance claim is filed, would the insurance company's compensation take into consideration the extra premium paid for a "super" ideal cut or would they merely find the lowest priced match in terms of 4Cs and issue you that amount plus the delta for the setting?

Thank you!

 

[WillyDiamond]

I've been reading about insuring a ring and wanted to check the following hypothetical example with the pricescope community.

Suppose a ring and setting is purchased for a cash value of $10,000 and insured for that amount. The ring includes an AGS triple zero "super" ideal cut diamond (e.g. Whiteflash ACA, BGD, etc).

Suppose diamond+gold prices stay unchanged so that $10,000 spent today is worth $10,000 in the future.

In the event that it gets lost and an insurance claim is filed, would the insurance company's compensation take into consideration the extra premium paid for a "super" ideal cut or would they merely find the lowest priced match in terms of 4Cs and issue you that amount plus the delta for the setting?

Thank you!

You are best to have the appraisal description as detailed as possible naming the most unique and special details of the diamond, such as using the terms "Hearts and Arrows", "AGS triple 0", describing that the diamond is laser inscribed on the girdle, etc.
You want to do this because in a case of loss, and insurance co has jewelers they will refer to you, however, you want to present the case that this is no ordinary diamond and you want it replaced by a similar stone, for example if you bought it at WF you want it replaced by WF with one of their ACA stones.

Edit: Your post is interesting timing for me. I just upgraded my wife's ER to a halo pave border and pave on the shank, so I got a very detailed appraisal from the PS vendor. I sent it to my insurer and I was appalled at the "description". It was full of grammar errors, inaccuracies, and so unprofessional that I had a mild fit with the agent. They are going to re-do it. Told them to just use the words from my appraisal. I wont mention the insurer, but it was appalling.

 

[new4diamond]

I asked Perfect Circle Insurance that very question...If I insure a diamond with a stated value of $10,000, with documentation (in my case a copy of the invoice showing I paid $10,000) that shows it was a BGD Signature H&A's, if they could not find a comparable diamond what then?

I was told they would write a check for the insured value of $10,000 if no comparable diamond could be found. I know that there would be no way to find an exact match, however an Ideal 0, H&A's of BGD vs WF vs Infinity, AGSL vs AGSL, an VS2 vs VS2, an G vs G, an 1.510 vs 1.515 would seem comparable (my thoughts)....the carat weight may be the hardest, I don't know if a .01 is close enough ?....the thing is who determines what is comparable, the insurance company does.

Now I know that is a rather generic & verbal answer in which inurance companies will do what they can to payout the least they can get by with. You can read one of their policies on their web site, I have read their policy many times over, may need a lawyer.

 

[SB621]

It will depend on your policey. I know with USAA they want all the details and will take into consideration if the diamond is super ideal with trying to find a replacement. However with them, they have pretty much told me that if the diamond is an FCD, an old cut or super ideal cut they will probably just cut you a check.

 

[heididdl]

Yes my insurance company Progressive also will cut you a check. In my case I haven't had my ring reappraised in twenty years. It is GIA certified and I think that the replacement value would be much higher today. But I have to have a new GIA certification as it was done in 1981 and reappraised. I am not sure it already costs me $700 a year to insure. But make sure all the wording is there as the others suggested and if it is lost of stolen they will have to get as close as possible with replacement of they will give you a check and you will have to replace it yourself with that amount.

 

[denverappraiser]

Always these things come down to the details of the policy and they are not all the same but the standard way of identifying what is comparable is to look at the description section of the appraisal that they ask you to submit when you bound the policy. They will either meet or exceed the specs given or cash out for the face value of the policy. AGS0 is definitely a spec. BDG branding is a spec. Infinity branding is a spec. If it's not in the appraisal, it's NOT a spec. If, for example, you buy a BGD signature stone and they can't replace with a BDG (for sake of argument lets say they are out of business), they will offer you one that they consider comparable, but you are under no obligation to accept. This begins a negotiation. Is a GOG signature comparable? A WF? An Infinity? Some other brand that doesn't even exist yet? A generic AGS0? That's up to you, and that's why you want a detailed description in that appraisal. If it's not in there, you can't use it. If it is in there, you can always negotiate it away if you want.

 

[sonnyjane]

I asked Perfect Circle Insurance that very question...If I insure a diamond with a stated value of $10,000, with documentation (in my case a copy of the invoice showing I paid $10,000) that shows it was a BGD Signature H&A's, if they could not find a comparable diamond what then?

I was told they would write a check for the insured value of $10,000 if no comparable diamond could be found. I know that there would be no way to find an exact match, however an Ideal 0, H&A's of BGD vs WF vs Infinity, AGSL vs AGSL, an VS2 vs VS2, an G vs G, an 1.510 vs 1.515 would seem comparable (my thoughts)....the carat weight may be the hardest, I don't know if a .01 is close enough ?....the thing is who determines what is comparable, the insurance company does.

Now I know that is a rather generic & verbal answer in which inurance companies will do what they can to payout the least they can get by with. You can read one of their policies on their web site, I have read their policy many times over, may need a lawyer.

I was told by JM that they will replace with a comparable piece BUT only up to the value that you have it insured for, which is why it's important to have your piece reappraised every few years.

 

[new4diamond]

Always these things come down to the details of the policy and they are not all the same but the standard way of identifying what is comparable is to look at the description section of the appraisal that they ask you to submit when you bound the policy. They will either meet or exceed the specs given or cash out for the face value of the policy. AGS0 is definitely a spec. BDG branding is a spec. Infinity branding is a spec. If it's not in the appraisal, it's NOT a spec. If, for example, you buy a BGD signature stone and they can't replace with a BDG (for sake of argument lets say they are out of business), they will offer you one that they consider comparable, but you are under no obligation to accept. This begins a negotiation. Is a GOG signature comparable? A WF? An Infinity? Some other brand that doesn't even exist yet? A generic AGS0? That's up to you, and that's why you want a detailed description in that appraisal. If it's not in there, you can't use it. If it is in there, you can always negotiate it away if you want.

When I submitted, I had just purchased, I only provided a copy of the invoice (even though they state anything over $5000 needed an appraisal). They accepted the invoice. The invoice had most of what I assumed I would need. It was a BGD Invoice, listed as a H & A's round, carat wt, diameter, AGS lab report number, price...that is what I insured it for. Between the time I submitted and the couple of days later, I actually got it appraised, but did not use the appraisal. Every few years I know I should review the repalcement cost and if needed I will get a new appraisal and make sure that all the 'specs' are listed.....thanks

A question...your expertise as an appraiser. Do most appraisers know the importance of what you wrote in the above post or as you mentioned before the need for the customer to provide as much documentation & info as they have?

 

[new4diamond]

sorry, Dbl post

 

[denverappraiser]

A question...your expertise as an appraiser. Do most appraisers know the importance of what you wrote in the above post or as you mentioned before the need for the customer to provide as much documentation & info as they have?

I know a lot of highly skilled appraisers but this is a totally unregulated field that's full of charlatan who seem to think a bit of sales experience, a GG, and a microscope is all it takes to set up shop. Choose your appraiser with the same care you're using with the rest of this process.

 

[Modified Brilliant]

As Neil stated...plus if you don't communicate clearly with your appraiser he or she
might leave out critical information while doing your appraisal. Communication is key!

I will typically ask my client at least 3-4 times during the evaluation if they
have any questions about anything. Check your document before you leave or have
the appraiser explain to you what was written.

Don't assume anything and know that many appraisers are not familiar with pricescope
or some of the popular vendors here as well as their branded cuts.

 

[diamondseeker2006]

I have a question that seems to be a problem mentioned here often. It is not in the consumer's best interest to have an inflated appraisal because it causes inflated insurance premiums. Most of the vendors include inflated insurance valuations with a sale. My insurance thankfully accepts sales receipts to determine value. But I wondered if you guys who are respected appraisers will work with the client on the value to make it near the purchase price (which IS the actual current replacement value)????

 

[WillyDiamond]

I have a question that seems to be a problem mentioned here often. It is not in the consumer's best interest to have an inflated appraisal because it causes inflated insurance premiums. Most of the vendors include inflated insurance valuations with a sale. My insurance thankfully accepts sales receipts to determine value. But I wondered if you guys who are respected appraisers will work with the client on the value to make it near the purchase price (which IS the actual current replacement value)????

I hear what you are saying, not to pay inflated insurance premiums, but the invoice or what you paid today is not what it will cost in 1 year, 2 years or in the future. Personally I like the appraisal to be higher than replacement value. State Farm for example increases the values every year. Jewelers Mutual does not.

 

[diamondseeker2006]

I have a question that seems to be a problem mentioned here often. It is not in the consumer's best interest to have an inflated appraisal because it causes inflated insurance premiums. Most of the vendors include inflated insurance valuations with a sale. My insurance thankfully accepts sales receipts to determine value. But I wondered if you guys who are respected appraisers will work with the client on the value to make it near the purchase price (which IS the actual current replacement value)????

I hear what you are saying, not to pay inflated insurance premiums, but the invoice or what you paid today is not what it will cost in 1 year, 2 years or in the future. Personally I like the appraisal to be higher than replacement value. State Farm for example increases the values every year. Jewelers Mutual does not.

Right, raise the value as needed. Some years diamond prices decline or stay the same. Why overpay? They aren't going to usually write you a check for the full appraised amount if a similar stone costs less at the time of the loss.

 

[denverappraiser]

An interesting problem exists in the modern market, especially with Internet shoppers. The usual standard of value for insurance purposes is the expected budget required to replace the item with another of like kind and quality at retail, new, locally, or words to this effect. This is important because this is NOT typically where or how the transaction is happening. You may spend weeks or months meticulously shopping for the best deal and/or the best stone on the planet but this is not normally an acceptable replacement strategy. People want to go to a specialty jewelry store, tell them what they want, and get it in some reasonable amount of time. Drop shipping it from some factory overseas is simply not an acceptable procedure, even if that's what YOU did. Even though the insurers can and do beat up the jewelers on the prices, it routinely costs more to do the replacement than the original deal. If they can just go back to the selling jeweler, say WF or GOG, ask them what they have currently available and buy whatever is most appropriate, that works just fine but what if that fails? What if WF is gone? What if they've raised their prices (notice what's happened with diamond prices in the last 3 years for example)? What if your item is no longer available and the replacement must be custom made? For these and other reasons it's appropriate to have an insurance limit that's above the transaction price. How much above will depend on what you have. It's not always an easy question and it's part of the reason for using a competent appraiser in the first place.

Why overpay? It's a good question. It's because changing the value, meaning reappraising, is not without cost and effort. As much as I would love to see my clients come back every year, and a few of them do, for people with 'normal' sorts of goods it makes more sense to pay a little more in premiums to have some coverage you probably won't use than to pay to get things revalued continuously as the market changes. Put another way, if your ring is only 'worth' $2000, your premiums are likely to be in the $30 range. The appraisal is going to be $100 or so. Another $1000 in liability limit will increase your premiums by $15. If the appraisal on your $2000 item says $3000, you've wasted $45 in premiums over 3 years. If you get it reappraised every year you've spent $200 at your appraisers office to save $45 from your insurer.

 

[diamondseeker2006]

Fair enough on low value items. But to insure my $20k diamond for $30k would be about $100 more a year which means it makes no sense to over insure. I believe prices went really high in 2011 and some prices have declined since then. So it just isn't always the case that prices steadily increase. But I don't have this problem personally since I was fortunate to get a Chubb stand alone policy while they were still doing them. They ask me every year if I want to increase value by a certain percentage so I can watch prices and determine current value.

 

[LibbyLA]

I don't know exactly how insurance companies set their premiums, but if they have some target minimum profit, they set their rates based on their loss experience and their desired profit. It's possible that "inflated" replacement values result in lower per $100 prices and if replacement values decreased, the rate per $100 would increase so you'd be paying the same net cost for the piece.

liz

 

[Karl_K]

I don't know exactly how insurance companies set their premiums, but if they have some target minimum profit, they set their rates based on their loss experience and their desired profit. It's possible that "inflated" replacement values result in lower per $100 prices and if replacement values decreased, the rate per $100 would increase so you'd be paying the same net cost for the piece.

liz

Yes all the 2x retail price appraisals lower premiums per $100 for those that do not fall for the 2x appraisals.
If everyone started say insuring for current retail + 30%(then reevaluate every couple years, which is what I do) then the premiums per $100 would go up for everyone eventually as the insurance companies raised rates to make the same profit.

 

[diamondseeker2006]

I don't know exactly how insurance companies set their premiums, but if they have some target minimum profit, they set their rates based on their loss experience and their desired profit. It's possible that "inflated" replacement values result in lower per $100 prices and if replacement values decreased, the rate per $100 would increase so you'd be paying the same net cost for the piece.

liz

Yes all the 2x retail price appraisals lower premiums per $100 for those that do not fall for the 2x appraisals.
If everyone started say insuring for current retail + 30%(then reevaluate every couple years, which is what I do) then the premiums per $100 would go up for everyone eventually as the insurance companies raised rates to make the same profit.

Sooo, the moral of that story is, people like Karl and me will get to enjoy the lower rates while the masses overpay. We just try to share with the relatively few people in the world who read jewelry insurance threads. The thing is, no insurance company is going to replace your diamond worth $10,000 with a $20k stone just because you put that value on it. They'll replace it for $10k (or less) and that is how they make big bucks.

 

[blackprophet]

Yes all the 2x retail price appraisals lower premiums per $100 for those that do not fall for the 2x appraisals.
If everyone started say insuring for current retail + 30%(then reevaluate every couple years, which is what I do) then the premiums per $100 would go up for everyone eventually as the insurance companies raised rates to make the same profit.

So for a lay person, how would you go about getting that Current Retail + 30% appraisal for your insurance purposes? I don't think any insurance company is going to just take your word for it.

DA, for the "good guys" in your profession, is that what they are appraising at? I know that there are many nuances associated with the answer to my question. I guess for future reference, how do you know something has been "over valued"?

 

[denverappraiser]

Yes all the 2x retail price appraisals lower premiums per $100 for those that do not fall for the 2x appraisals.
If everyone started say insuring for current retail + 30%(then reevaluate every couple years, which is what I do) then the premiums per $100 would go up for everyone eventually as the insurance companies raised rates to make the same profit.

So for a lay person, how would you go about getting that Current Retail + 30% appraisal for your insurance purposes? I don't think any insurance company is going to just take your word for it.

DA, for the "good guys" in your profession, is that what they are appraising at? I know that there are many nuances associated with the answer to my question. I guess for future reference, how do you know something has been "over valued"?

Talk to your appraiser about it. Again, the usual definition of value is the estimated cost to replace the item with another of like kind and quality at retail, new, locally. That is not the ONLY option. The relationship between that and what the discount online folks are charging is not linear and varies with what you buy, where you buy it and what is being considered as the local retailer. Not all stores charge the same.

I agree with the above that standard practice for insurance appraisers and even more so for selling jewelers is to value things rather high and that this is usually not in your best interest.

Deciding if a replacement valuation is reasonable is usually easy enough. Shop it. Mostly data about these things is pretty available and jewelers are usually pretty happy to talk to you about what they charge for things (the online guys usually have it available on their websites). If you don't want to go through the trouble or the time, hire an appraiser that you trust to do it for you and ask them to explain their conclusions. That's part of what you're hiring them for. If you think they're out of line (either direction), tell them why and discuss the issue. I can't say they'll agree with you or not but they should be prepared to tell you how they ended up where they did and why that fits the appropriate definition of value for the assignment.

 

[Karl_K]

Yes all the 2x retail price appraisals lower premiums per $100 for those that do not fall for the 2x appraisals.
If everyone started say insuring for current retail + 30%(then reevaluate every couple years, which is what I do) then the premiums per $100 would go up for everyone eventually as the insurance companies raised rates to make the same profit.

So for a lay person, how would you go about getting that Current Retail + 30% appraisal for your insurance purposes? I don't think any insurance company is going to just take your word for it.

Talk to your appraiser, if it is a defensible valuation they should not have a problem with it.
Considering how common 2x appraisals are I don't think many would have a problem with it.

 

[AnneinGA]

So this thread pushed me to pull my appraisal to see how my stones were listed.

All five in my five-stone are BGD signature stones; The appraisal lists their carat weight and color, then refers the reader to the AGS certificates for further detail, which are part of the appraisal document. Would this be enough to have them replaced like to like, should I need to, or should the details be in the actual description: BGD-Branded AGS 000 H, Vs2, etc.?

 

[denverappraiser]

So this thread pushed me to pull my appraisal to see how my stones were listed.

All five in my five-stone are BGD signature stones; The appraisal lists their carat weight and color, then refers the reader to the AGS certificates for further detail, which are part of the appraisal document. Would this be enough to have them replaced like to like, should I need to, or should the details be in the actual description: BGD-Branded AGS 000 H, Vs2, etc.?

That should be fine. The whole point of the grading report is to answer the questions of the grading and every BGD I can recall seeing has his logo both inscribed on the girdle and notated on the AGS report, which establishes the branding at least on the diamonds.