Underinsured? What should I do?

[teacherk]

I lined up insurance on my new e-ring so that I would have coverage as soon as it arrived. I called the office where I have my home owner''s and auto (as well as researching a lot of other options) and was assured me that there was a great stand alone policy they could write for me. I told the agent I talked to that I inteded to insure for a little more than I paid so that I could comfortably replace the ring if anything did happen. I specifially asked if I would need a full appraisal or if the letter of verification from the appraiser that would come with my ring from WF would suffice. He checked with the underwriter, called back and said no problem. I could insure for any amount between my purchase price and the letter of verification estimated value without needing a full appraisal. This was a week ago. Now the underwriter doesn''t want to insure for more than my purchase price all of a sudden. The agent who wrote my policy had to turn it over to the agent who handles our homeowner''s and auto policies (he was out of the office the week I ordered my ring) so now I''m dealing with him. He called Friday afternoon and told me that he understood that I "thought" my ring was worth more than the purchase price but the underwriter was only willing to insure for the price I paid unless I could verify the larger amount with a full appraisal. He was somewhat condescending. I''m sure everyone thinks their stuff is worth more than they paid, but in my case....

You guys know! I bought from WF so I know that I did get a great price, plus now diamond prices are going up. Gold has been up. I just want to be able to replace my ring if something happens. I''m willing to pay the higher premium and even opted for this policy so that in that event, I would just get a check and could shop for the ring I wanted and not have the insurance people overseeing the process. It irks me too that I got this information on a Friday afternoon when there isn''t really much I can do until Monday. In the meantime, my ring is insured for what I paid. My agent is supposed to call Monday to see if the underwriter will stand by what they originally said and honor the letter of verification. I''ve called some apprasiers around here and none of them will do an on the spot appraisal while I wait. They all want me to drop my new baby off and leave it for a minimum of a day or two. Ugh! I don''t want to, but I guess I will if I have to. Should I go ahead and get the appraisal and be done with it? If I insured through another company would I have the same issue? The agent''s tone made me want to tell him to forget it but I don''t want to throw the baby out with the bath water. Maybe I''m just over reacting.

 

[diamondseeker2006]

I would insure for the purchase price now and have the ring appraised every 3-5 years to update the value.

 

[neatfreak]

Getting an appraisal isn''t that big of a deal, I''d just do that if it will ease your peace of mind. It makes complete sense that they wouldn''t insure it for more than your paid without proof that it was actually worth more...

 

[denverappraiser]

Who is the insurance company?

Ask the agent how claims are resolved in the case of a loss. With most, the policy is for the company to replace with another of ‘like kind and quality’ and the paperwork you provide is what they will be using as the purchase order for the replacement. Details are important. For example: Many WF customers pay a premium to get ACA branding in order to get hearts and arrows optical symmetry and AGSL graded stones. If this isn’t mentioned in the paperwork you present, it won’t be used as one of the specs for the replacement.

The insurance companies hire full time professional shoppers for this sort of thing and they really do know what things costs. They’ve got all the databases and they have enormous buying power. They also have WF’s phone number. The verification letters that I’ve seen have been a little sparse but they’re not useless. They include both the AGSL report number and the WF style number on the mounting if it’s one of their house designs. This actually provides quite a bit and it pushes a reasonable likelihood that the replacement will be made at WF, at whatever price WF is charging for things like that at the time of the loss. Sure, they’ll try to beat them up on price and they may even get a token discount, insurance companies make great customers, but that’s between the jeweler and the insurer. One thing you can be sure of, they won’t pay MORE than you would have to.

So the question is how to deal with inflation? This is up to you. It’s worth noting that the premium charged for the policy is a straight percentage of the declared value while the behavior in the case of a loss has to do with the description. Buying additional coverage in anticipation of inflation is a gamble (although perhaps a small one). If the replacement cost goes up less than the amount of additional coverage you bought, you get no value for your premium dollars even if you DO have a claim. Obviously this is doing you no good and you are effectively making an educated guess as to how the value will change over time. Trained appraisers can help you with this (among other things), and it’s one of the benefits of using a real appraiser but we’re just making educated guesses as well. Predicting the future is the job of a psychic, not an appraiser. What we do is try and make reasonable assumptions based on observations and experience and to document what we’ve done in a way that’s useful to the client.

It’s entirely appropriate that your insurance agent not be the one making this decision. Even if they were qualified as an appraiser, that would be a huge liability issue for them and would look really really bad if they ever needed to explain it to a judge. That’s why they want you to hire an appraiser instead of doing it themselves.

If your only concern is being properly covered for your insurance, use the purchase price and document it with the sales receipt, lab documents and verification letter. It’s a good idea to take a couple of pictures too. After a year or 3, get a real appraisal from a real appraiser. At the end of your 3 years you may be slightly underinsured depending on how the market has gone but you will have saved a bunch on premiums and an appraisal fee as well so it’s not all bad. If this is going to cause you stress, get an appraisal and discuss the whole valuation issue with your appraiser.

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

 

[teacherk]

My insurance agent called my yesterday to say the the underwriter will accept the letter of verification from the appraiser in lieu of a full appraisal and will insure it for the amount there (I actually went in between the amount I paid and the LOV amount). This is a cash policy where if something happens to my ring they cut me a check. That is why I thought it would be important to insure it for an amount I could replace my ring for without worry. The ring I bought a week and a half ago would already cost me more than I paid just from the recent price increases. I opted for this kind of policy because I was afraid of letting the insurance company dictate to me what was a "like ring". I hope I chose wisely, and ultimately I hope I never have to use my policy. It does ease my mind to wear and enjoy my ring though knowing that if something does happen to it I''m covered. Thanks for all the great advice!

K

 

[denverappraiser]

Who is the insurance company?
What state are you in?
What’s the declared value and what’s the premium being charged? Is there a deductible?

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

 

[Modified Brilliant]

Date: 6/3/2008 10:56:24 AM
Author: denverappraiser
Who is the insurance company?
What state are you in?
What’s the declared value and what’s the premium being charged? Is there a deductible?

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

I would like to know as well.

 

[teacherk]

The company is Inland Marine. I chose no deductible option since the policy was very reasonable as quoted. There were several deductible options available though. I am paying $98 per year for $6800 of coverage. I live in Arkansas and this policy was written through my Farm Bureau agent. I had planned to go through Touchstone via the link on the WF page but when my insurance agent came up with this policy it sounded a bit better. My premium through Gem Shield (My ring wouldn't meet the minimum for a Chubb policy) would have been $78 a year and as I'm sure you know, would be a "replace with like kind" type policy. That would have been fine as well, but the policy I ended up with gives me a little more latitude. I would more than likely buy my replacement ring from WF, but who knows what can happen. If I had to file a claim a few years down the road and WF had changed ownership or their prices were higher, or they did not carry my setting, etc. I would have more freedom to look around. At least that was what I was thinking when I went with the Inland Marine policy (sounds like boat insurance). I do not have the final copies of the insurance documents in hand yet, they are at the underwriter's but I asked my agent every question and threw every scenario at him I could think of. All questions were answered to my satisfaction. I hope I haven't missed something obvious. Seems like a good policy, huh? I'm just happy to have insurance. Before I found PS and was looking at the mall stores I couldn't imagine wearing such an expensive ring around with just the standard diamond guarantee they include at most of those store. If you lose your ring all together or it is stolen, or the stone falls out and is lost but you didn't jump through the hoops so your guarantee lapsed, etc. your are up the creek. Of course, I didn't realize all the options that were out there at that time. That seems sooooo long ago! I have really been getting an education on this forum. BTW, I think this insurance company usually does require a full appraisal but let me slide this time since one of their people told my agent we could use the LOV. I do plan to get a full appraisal at some point. I have found a jeweler in a nearby town that looks promising. We have a one man show in my town and he would have his knickers in knot that I didn't buy from him so I wouldn't want him to do my appraisal. (Around here the only appraisers ARE the jewelers, is that how it usually is?)

Neil, I always love to read your posts. Very informative! I feel honored you have chimed in on my "issue".

K

 

[surfgirl]

Sorry you''re having such a time with this, it really shouldn''t be that difficult. The insurance company you''re using doesn''t seem to really get underwriting of an ering, to be honest. And I''m not sure who you''re contacting for independent appraisals but there is no way you should have to leave your ering for any amount of time for an appraisal - you make an appointment, sit there with the appraiser as s/he does their thing, and you get a report as well as a conversation on the report contents. Have you tried to top of this page link to search for local independent appraisers in your area? If not, please do, and if you cant find anyone listed here, just start a new thread asking for Independent Appraiser Referrals in Akansas...Maybe one of the guys here can help link you to someone reputable.

As for Touchstone, they''re great but they dont only offer Chubb. They also have Jeweler''s Mutual and I think one other option for erings so you might want to call Ralph over there and talk to him about this. It sounds like you''re getting a run around to me...

 

[denverappraiser]

K,

Thanks for the kind words. ‘Inland Marine’ is actually what they call the entire category of personal property insurance ranging from fine art to computers to jewelry. It comes from the origins of the insurance business itself.

A few centuries ago, intercontinental shipping was a very expensive, very profitable and very risky business. The chances of losing a ship full of cargo from the new world to Europe was considerable and extremely costly and the big shipping companies agreed to collectively share this risk by paying a portion of their profits into a pooled fund that would pay for a new ship to replace the one lost by whoever it was that ran into hurricanes, pirates or whatever. This was known as ‘marine’ insurance and it ushered in a whole new industry because previously all insurance contracts had been attached to land ownership, what now would be called fire insurance.

As it happens, these same sorts of risks apply to all sorts of personal property (which is what insurers call everything other than real estate or intellectual property) ranging from trucking to jewelry ownership. ‘Marine’ insurance offered on things other than shipping became called ‘Inland marine’, a term that persists to this day.

I’ve never heard of a particular company using that name as their title but there’s nothing wrong with it I suppose. They can name themselves whatever they like and there are LOTS of insurers I’ve never heard of. Your rates sound reasonable and your coverage sounds excellent although it’s always worth taking the time to read the fine print in the policy when it arrives. Pay special attention to the section describing how claims will be handled. Sometimes the agents can stretch the point a bit in order to make a sale and many don’t really understand the questions.

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

 

[teacherk]

Thanks for the info, Neil. I got my policy in the mail today and have been reading through. It does say "Inland Marine" on the front, but has "Farm Bureau" printed on it also so I think it might be just as you said and Inland Marine is just the type of policy it is. My agent was out of town when I went in to do the paperwork and a new agent handled my application. He looked about 15. I must be getting old. Everyone looks so young! He told me that the policy was not actually a Farm Bureau policy and said the company name was Inland Marine, but maybe he wasn''t clear on it either. I plan to read the fine print and make a list of questions and call my regular agent now that he is back in the office. From what I can see it does appear to be the way it has been described to me but no harm double checking. In any case I do have some peace of mind to wear my ring now and not worry about something happening to it, so mission accomplished.

Surfgirl, I think I will check around PS to see if there are any Arkansas appraisers. I have plenty of time to research that since my insurance company is not going to require a full appraisal. I would like to have one done sometime in the future though. It would be good to have some idea of where to go. I also might have one done when I go home to visit in Tampa. There is more of everything there compared to where we live. I might have better luck in a bigger city than a small town. Thanks for posting!

K