July 2015 – Insurance Appraisals (Appraisals Part 2)
Insurance appraisals are the most common type that I write. They are not quite as straight forward as I had wanted to believe when I first started in the industry. Most policies are written to replace with “like kind and quality.” Generally this is easy enough, but if it is a branded item it must be replaced with a branded item which means tracking down the company. If it’s a style no longer in production or an antique hand fabricated piece it can be trickier.
When looking at an insurance appraisal (or any other type of appraisal) you want a detailed description. I’ve seen too many over the years that say something along the lines of “yellow gold tennis bracelet 3ct total weight $4500.00.” My typical response to this description (in my head) is “WHAT?” What type of metal, what type of setting, 3ct of what gemstones, how many of said gemstones are included and what are their shapes and grades? These facts are important when determining the value on the initial appraisal. They are also important if something should happen to the bracelet and you need to replace or identify the item there is no way to know what this bracelet looked like with that limited amount of information.
The appraised value establishes your coverage limit on your policy. You should be aware that the coverage limit is not necessarily the value on the check you may receive from your insurance company unless you have a “cash out” policy. Most policies are written so the insurance company is required to make you whole with a replacement of like kind and quality. (This is why that description is so important.) What this means is the insurance company either needs to supply you with the same item you lost or give you the funds to replace that item. Most insurance companies buy in bulk so they recieve special pricing so they can replace the item for less money than you could in a retail situation. So the check they give you is only going to be what they would pay to replace the item.
It seems like every insurance policy is different. A question I ask when someone says they need appraisal for insurance is, “What is your deductible?” Many do not know. The reason I ask this of a customer is because if someone has a deductible of $500, it is really not cost effective for them to pay for an appraisal and the insurance premiums on a piece that is valued $550. Often it is as simple as a phone call to their agent or policy provider to attain this information. Then I can go through their jewelry with them and advise what needs to be appraised.
I don’t want to advise on insurance policies too much, because every situation is has different needs, but I would encourage you to ask or research what your policy covers. Sometimes “mysterious disappearance” is not covered, so if you lose your ring, you’re out of luck. If you review your homeowner’s or renter’s policy and don’t like the jewelry side of things you can always take an additional policy out encompassing just your jewelry from Jewelers Mutual. I’ve worked with them on replacements and the client’s that have used them in the past have been very happy.
If you just have too much stuff and you’re not sure about any of it, contact me. I’m happy to walk you through things, give you some questions to ask your insurance people, and advise what items may need an appraisal.
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