The Most Important Advice as an appraiser I can give to you is to talk to your insurance agent regarding your jewelry coverage. All insurance company’s can vary in their coverage, and you as a client, need to know:

 

            --- What does my policy cover?

            ----What are the limits of coverage?

            ---- How will a claim be handled if I have a jewelry loss?

 

RULE # 1       Talk to your insurance company.

 

There are three general types of jewelry insurance. And there are many misconceptions of what is covered and what is not covered.

 

 

 

Many customers are under the assumption that if they own jewelry, it is covered under there Standard Homeowner’s Policy. This is Misconception # 1.

 

A standard homeowner’s policy, generally only covers jewelry items for theft and fire.

There is a Limited Amount of Coverage on the Standard Homeowner’s Policy; it is not full coverage.  In many states, the amount of total coverage, for all the jewelry you own is limited to $ 1500. In the event of a claim, your deductible amount from your policy will be subtracted from the amount of the claim. Most homeowner’s standard policies (blanket coverage) will NOT cover a claim for loss, mysterious disappearance or damage.

 

 

 

The jewelry rider is a specific policy that insures you for theft, loss, fire, mysterious disappearance and damage; it is an all inclusive policy rider. Jewelry riders are obtained when a customer turns in a Sales Receipt or Appraisal and requests inclusive coverage on the jewelry item(s). The policy can be attached as a separate jewelry rider to your Standard Homeowner’s Policy or there are Personal Property Insurance Firms that can write a separate jewelry insurance policy for Replacement Value. In the event of a jewelry loss, these policies are generally non-deductible policies. Each option; whether the policy is attached or non-attached to your homeowner’s policy, has its advantages and disadvantages, so: RULE # 1 –Talk to your insurance company.

 

 

 

Misconception # 2 is that the jewelry item(s) being insured for Replacement Value Coverage are insured for an Actual Cash Payout amount in the event of a claim.  More later in this article on how the claim may be handled.

 

 

 

The jewelry rider is a specific policy between you and your insurance company that has an Agreed Value amount of insurance coverage on a particular item(s). These policies are handled on a case by case basis and even Agreed Value Contracts have some variation in how they are settled. The policies can be used for one of a kind items or unique items that may be impossible to replace, such as antique jewelry items.

 

This type of policy generally caries higher premiums than standard Replacement
Value Coverage.

 

 

So what about Misconception # 2:

 

The Replacement Value is defined by state laws and technically the customer is insuring the jewelry item for “The Benefits of Ownership”. An “Owners Benefits” is measured by what a customer would likely have to pay to get an equivalent replacement. It is NOT a Specific Actual Cash Value, but more an average value of a comparable, not necessarily identical, jewelry item. The Scheduled Replacement Value Coverage obligates the insurance company to replace the item, NOT dollar amount. This is where it is very important to have a detailed written document- sales receipt or appraisal—that sufficiently describes the item well enough to justify the Replacement Value. What will happen in the event of a jewelry claim depends on the “fine print” in the insured’s contract. Insurance Contracts are “captive” contracts, so nothing that the appraiser writes or stipulates can change the contract. The only certainty is that the insurance company, by law, will not exceed the insured value in settling a claim. 

 

But, remember that insurance companies are generally publicly traded companies and they also have an obligation. There obligation is to their stockholders, and as any well managed company, they are focusing on getting an equivalent replacement jewelry item at the lowest possible price or cost to the company.

 

 

All insurance companies are out to “screw” the consumer in the event of a jewelry claim.

Most insurers are intent on making the client whole, not shortchanging them in any way. Many times appraisals or sales receipts are deficient in their description of the jewelry, making the insurance underwriter’s job difficult.

 

In the event of a claim, some things to you might want to know.

 

1.)                          Does your insurance company work with a particular jeweler to replace your jewelry item?

2.)                          Are you obligated to work with the jeweler that your company may refer you to?  

3.)                          What happens if you do not want to replace the item and request a cash payout?

 

RULE # 1—Talk to your insurance company.

 

Many insurance companies have arrangements with particular jewelers to settle jewelry claims. Generally they work like this. The insurance company pays the jeweler a “commission” which is a percentage mark up above the wholesale cost to replace the item. These commissions can be as high as 40 percent for jewelry items of low dollar amount to as little as 20 % for high dollar jewelry items.

 

This can lead to a conundrum: The requested Sales Receipt or Replacement Value Appraisal on which the insurance company basis the customer premiums is higher than the cost of the insurance company to replace the item. The insurance company is going to use the Wholesale Cost plus applicable commission to the jeweler as its basis for indemnifying the customer.

 

Again, this is where realistic, well detailed and well documented appraisals or sales receipts provide the best basis for insuring your jewelry. The most important service an appraiser can provide to the customer is to provide a detailed description of the jewelry item with value-setting characteristics and a realistic Appraised Replacement Value based on the average value to replace a like kind jewelry item. Any value setting characteristics, such as brand name of a manufacturer along with style numbers should be noted in the appraisal. The most harm an appraiser can do to a client is to leave him/her underinsured. And the second most harm an appraiser or retail jeweler can do to a customer is to have the customer purchase excessive, superfluous insurance.

 

When insuring your jewelry remember RULE # 1—Talk to your insurance company.