What will I receive in the event of a loss?

by Admin 15. February 2014 18:04

Oftentimes people have the misconception that in the event of a loss, they will receive the dollar amount on the appraisal from the insurance company.

This is only true if you have an article scheduled on your homeowners policy, and if you have purchased specifically an agreed value policy.

It used to be only certain insurance companies offered these policies, but now many have this as an option.  Generally it is more expensive.

When you have an article scheduled most companies policies agree to give you the actual cash value, not agreed value, in the event of a loss.  Actual cash value is the current actual cost to replace an article of like kind, quality, and condition at the date of the loss, minus any applicable depreciation (rarely applied with jewelry).  This means that they agree to reconstruct or replace the article based on the description in your appraisal (again why that document is so critical). 

The insurance company tries to do so as inexpensively as they can.  Not unlike any business, it is in their best interest as well as the interest of their client’s (hopefully resulting in lower premiums) to save as much money as possible.

They generally get quotes through independent replacement services, jewelers, and may do so as well through i-Val to determine the amount of the replacement.  It is oftentimes less than the value on the appraisal.

What the insurance company pays to replace your jewelry is irrelevant.  What is important is that you are made whole by putting you into the position you were prior to the loss. 

Your appraisals are important to get updated periodically to protect you in the event of a loss.  Even if you have good descriptions, if the market has increased and the value on your appraisal is not current, you may not be able to replace what is lost. I recommend updating appraisals every three years.

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Good Example of a Bad Appraisal

by Admin 15. January 2014 17:04

Periodically I am going to share with you appraisals that come across my desk, that demonstrate the importance of adequate documentation.  Here is one I received last fall.  Fortunately the client was savy enough to question the value of her solitaire diamond ring, and called me.  She was correct, it was dramatically undervalued.  Had she not caught that, she might have sent it to her insurance company to schedule on her homeowner’s policy.  The insurance company most likely would have accepted it for scheduling.  So, what would have happened if she had lost it?  The most she would have received was the amount on the scheduled based on the appraisal, which was $12,500.00.  Based on i-Val and my opinion, the current estimated value for the purpose of insuring the ring should have been around $30,000.  As a replacement provider, in my opinion based on the appraisal document (noting that the document does not identify the gram weight of the ring so I estimated), the actual replacement cost today is $24,800. This is the amount that I, as a replacement provider, would charge the insurance company today to replace this article. What would this have meant to my client?  In order to replace today in the event of a loss, she would have to be out of pocket nearly 13,000.

 

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Diamond Clarity Enhancement

by Admin 15. December 2013 17:04

Did you know that in some cases the clarity of a diamond can be improved?

If inclusions are visible to the naked eye there are two treatments that can improve the appearance.

Nothing is wrong with doing this, but it is unethical if not disclosed to the buyer.

Often there is the misconception that the brilliance in compromised if a diamond is enhanced. That is not at all true, clarity enhanced diamonds can be very brilliant.  They are dependent upon all of the grading elements just like untreated diamonds.

One method is called laser drilling.  It is used when a diamond has a dark included crystal (otherwise known as carbon).  A laser is used to bleach the crystal so it appears white rather than black.  As a result it is more difficult to see.  It is really amazing when you magnify because it looks like there is a straw going right to the inclusion. 

Another method is called fracture filling.  If a fracture breaks the surface of a diamond, a substance is introduced which makes light travel at the same speed as though it was going through a diamond rather than a crevasse.  This makes a visible fracture disappear. It’s a lot like a repair on your car windshield.

The substance is completely stable if done properly.  If not, it can over time change color and become visible.  Check with your jeweler if you are interested to make sure it is a reputable manufacturer and treatment.

With either treatment, you should pay less than what the diamond appears to be in clarity.  That is to say, you are really buying an eye visible diamond plus the cost of the treatment. 

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What You May Not Know About Jewelry Appraisers

by Admin 15. November 2013 17:04

Did you know that there are no requirements for jewelry appraisers?  There is no governing agency.  There are no educational or experiential requirements.  Pretty surprising these days with so much being regulated. 

In order to appraise, one needs to be able to identify, as well as value.  Identification is a process of deductive reasoning through observation and testing.  Sounds pretty boring, doesn’t it?  It’s actually more fun than it sounds, because we’re working with pretty and valuable items. 

Looks can be deceiving and can make a large difference in value.  I used to do jewelry replacement training for insurance adjustors for a major insurance company.  I would bring in a tray of red gemstone rings.  That usually got their attention… particularly the women!   The attendees generally assumed the gemstones were rubies, and were surprised to learn there were pink tourmaline, red spinel, a couple varieties of garnet, a pink sapphire, and only one ruby.  This is proof that education is so important. 

However, just because someone is a Graduate Gemologist from the Gemological Institute of America (GIA), doesn’t mean they know what the different value levels are, or how to utilize them.  For example, although the descriptions will be the same, an appraisal for an article for an estate is a completely different value then what it should be insured for. 

Correspondingly, just because someone has been in the jewelry industry for decades without the formal education, doesn’t mean they cannot value.  But, they may or may not be able to identify materials, treatments etc. 

Credentials or not, it is important to look for someone who has the knowledge and skills with which they may identify as well as value what you have, to help protect you in the event of a loss.

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Jewelry, It's the Sentiment

by Admin 15. October 2013 17:04

Jewelry is one of few material items to which we attach sentiment.

It may commemorate an occasion or an adventure. 

It’s not just sentimental it’s incredibly personal, tactile, and enduring.

It is one of few articles that we leave to our loved ones when we pass.  Even if they refurbish it for their own style, part of it continues forward. 

That is why when there is a loss of jewelry it is particularly difficult and emotionally loaded. 

Even if a jeweler can replicate your ring, if you lost the one that was blessed when you married, it still doesn’t feel the same.

If you lost something handed down from your grandparent, you cannot replicate that provenance and memory of it on that person.

Even though we know that factually, you may feel cheated if the insurance company gives you actual cash value in the event of a loss especially when it is below the appraised value.  Even though you know the policy contracts to make you whole by replacing the article.

The problem is you may never feel whole. And you may even blame yourself for the loss if it was a mysterious disappearance.  Or it may remind you of being victimized in a burglary.

Given the loading, I’m glad I’m not the insurance adjustor, but rather the person trying to help you put it back together.

So I hope you never have the experience, but if you do, take a deep breath.  As important as it is, accidents can happen, life isn’t always fair, but it is still an object.  It can be replaced.  You may know in your heart it is not the original, but hold onto what it represents.

That was the purpose of it all to begin with. 

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