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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