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Shopping For Insurance


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Almost everyone who buys an expensive piece of jewelry, buys an insurance policy shortly thereafter. A typical insurance policy will usually have premiums of between 1 and 3 percent of the declared value every year. Over the course of a lifetime, the insurance on an engagement ring often costs more than the ring itself! Just to make this worse, it’s common for jewelers to present the customer with an ‘appraisal’ that reports a seriously inflated value because it makes the store look good and it makes the customers feel like they got a ‘deal’. So far there’s no great harm but if you present one of these to an insurance company as the basis for an insurance policy, here’s what happens:


Insurance companies are no dummies. They know what things cost. Claims adjusters are professional shoppers and they have terrific buying power. They won’t cut you a check for the face value of that appraisal, they’ll buy you a new ring to replace your lost one. In effect, the payout in the case of the loss will be the same if you provide a reasonable value as if you provide one that’s double. The big change is in your premium. That’s a percentage of your declared value and the higher the value, the higher the premium. Every year. Double the ‘value’ and you get no change in their behavior in the case of a loss but you get to pay the double the fees. Forever. Who’s surprised that the insurance companies like this deal?


So what’s a sensible shopper to do?


When you get your item from the jeweler, inspect it carefully to see that it’s intact and undamaged. When you call your insurer, they will probably ask you for an appraisal and most jewelers include one with your purchase for this purpose. Read it. You’re looking for a few big things.


1) The description section should have sufficient detail that the company can use it as the purchase order for your replacement if you have a loss. They’ve got nothing else to go on so this should have photographs, weights, dimensions, sizes, scans of the lab reports, manufacturers warranty and guarantee information and anything else that will be important to you if it’s necessary to replace the item. This description is the reason that the insurance company wants you to provide the appraisal instead of hiring an expert of their own to do it. This description is a statement from YOU about what they will be required to do in the case of a loss. Make sure that it accurately spells out what you have in mind.


2) The price should be sufficient to accomplish the above. It’s the upper limit of the budget for replacement. If they can do it for less, they will. For replacement type policies, which is most, higher numbers on the bottom line do you more harm than good. In the case of a new purchase, you’ve probably been shopping for exactly this item and have a pretty good idea of who sells them and what they cost, at least today. If the value conclusion on the appraisal seems out of line, ask the appraiser, not the jeweler, why that is. Do they really believe that it would cost this much to replace the piece in the case of a loss? Why, since you managed to find it for so much less? Where is this marketplace they are describing and is it reasonably likely that that will be where your insurer goes for replacement?


3) Who says? Anyone who wants to can call themselves an appraiser or a gem lab. This doesn’t mean you have to care what they think and neither does your insurer. The standard that they have to meet is for ‘like kind and quality’ and if they stone is accompanied by an AGS grading report that says XYZ than that’s what they have to provide. This sword cuts both ways. If the reason to believe it’s a particular clarity is because ‘some guy’ said so, that’s all they have to produce. Some guy’s will say almost anything for a price, and for some the price is remarkably low. If the appraisal isn’t signed and the contact information and credentials of the appraiser aren’t provided, be nervous. They are not all the same. You know it, we know it and the insurance companies know it.


If the paperwork you have doesn’t meet this standard, all is not lost. Hire an appraiser of your own. ‘Free’ appraisals can sometimes be very expensive indeed. It’s usually not terribly expensive and the fees are quickly offset by the lower premiums and the better coverage you get from your carrier if you provide well-written and signed documentation. The real payoff happens at claims time when you get to argue about what will qualify as like kind and quality. Point to the appraisal that they’ve had in their files since before they agreed to the policy and smugly say; “THAT’s what I mean. Give me one like that and I’ll be happy, anything less and I’ll see you in courtâ€. Even the insurance adjusters like it when it goes this way because they know exactly what they have to do to make you whole again and, when they do it, you go away feeling like you’ve been treated well. They can process the claim quickly, effectively and conclusively. Everybody wins.



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