Is My Insurance Company Cheating Me?

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Is My Insurance Company Cheating Me?
By Ron Campbell
Central Coast Gem Lab
http://www.centralcoastgemlab.com

... The Central Coast Gem Lab and other gem laboratories have been hearing the same type of complaints over the years.

Complaint One: "I have been paying a premium to my insurance company for years now on my item which is appraised for $10,000.00. I have lost the item and the insurance company will only give me $4,500.00 in cash. Are they cheating me?"
Complaint Two: "I don't want to pay so much insurance. Can you appraise my jewelry for wholesale?"

... On the surface, the concept of jewelry insurance seems simple. Say you buy a piece of jewelry for $5,000.00. You, the buyer, receive an appraisal from the seller for that amount indicating that the item can be replaced for $5,000.00. You then send in that appraisal to insurance agent who charges you a fee based on that $5,000.00 value to cover you in the event that the item is lost, stolen, or damaged.
... If the item is stolen you contact your agent and say, "I want another item just like the first one."
... "No problem." says the agent, "Go to your jeweler, get them to make you another item just as described in the appraisal and have them send us the bill." However, things are never that simple.
... First, a very lucrative industry has grown up around the very big business of insurance replacements. It is a highly competitive and profitable market. In the event of loss, you will probably not be allowed to go "just anywhere," (meaning a jeweler of your choice,) to have your item replaced.
... You will most likely be told you have to go to a jeweler chosen for you by the insurance company. Unless there is a clause in your insurance policy, indicating that you can replace the item with the jeweler of your choice, you really do not have that ability to pick jewelers. Your insurer will always go to the jeweler who offers the lowest price to them for replacement. If you insist on going to your own jeweler, eventually you may be allowed to, but there are a few things you have to understand first.

A) In your lifetime, you may buy one item, or two, or four, or six. Your insurance company buys hundreds every month. They expect, and receive, volume discounts from their suppliers for the items they buy.
B) Your premium of $2.00 per hundred or $3.00 per hundred is calculated on the assumption that your insurance company will pay much less to replace that item than you will, (because of their volume buying power.)
C) If you want cash, to buy the item again from your own jeweler, it is unlikely that you will receive anything close to $5,000.00. You are not being cheated in this case. It does not make good economic sense for your insurance company to give you more in cash than they would have to pay to replace your item.
D) However, if you want another item that would cost you $5,000.00 to buy, they will have it made up for you, tapping into their volume buying power.
E) It is possible that, in order to do more business with your insurance company, your jeweler will most likely choose to replace your item for the price the insurance company is willing to pay.

... If you do go to a replacement jeweler, (of your insurance company's choosing,) make sure, before you sign the release form, that you insist on being able to have the new item assessed by an independent third party appraiser. Do this to ensure that what you are getting is the same quality as the item you had. Of course, your insurer will usually not pay for this service, it is up to you to check it out. If you find that the replaced item is not what you had before, you can get the matter corrected before it is too late, (i.e. before the release is signed.)
... Let us go back to complaint two: "Appraise my jewelry for wholesale. I don't want to pay such a high premium." OK, so your item might be appraised for $10,000.00 and you have a friend in the business. Why should you pay premiums based on retail? Well, for one thing, the whole point of insurance is to be covered in the event of loss, to break even, and not to make a profit. Your friend may be a fine person, but not necessarily a jeweler who can replace items like yours. Can you really afford to take that chance? If so, why buy insurance at all?
... You are most likely going to be the first person to raise hell if your jewelry cannot be replaced for the amount of your coverage, and you are going to be the only person that you can blame if this happens.

Questions To Ask Your Insurance Agent

... Before you call the agent who insures your home and simply have your jewelry covered, you should ask some questions. Jewelry insurance is a specialized field. If you do not like the answers go elsewhere. Shop around until you get the answers you want, but be prepared to pay for service. Remember, insurance is a product that you buy and if you are going to put out the money make sure that you understand the product being offered before you buy it!
... Listed below are some questions that you really need to ask the insurance agent. PLEASE READ THEM!

1) Is an appraisal necessary for full coverage?
2) What is the difference between scheduled and unscheduled coverage?
3) Is there a deductible? If so, how much?
4) Do I have the option to increase the deductible and thus lower the premium?
5) Is my policy all-risk, (partial loss, damage, mysterious disappearance, etc.)?
6) Am I still covered if there is negligence or carelessness involved?
7) Is the item covered if lost, stolen, or damaged while in the possession of someone else? (e.g. a jeweler.)
8) What if only a part is lost, stolen, or damaged while in the possession of someone else? (e.g. jeweler)
9) If there is a loss, do I have a choice of a full cash-out or will I have
to accept less?
10) Can I go to whomever I wish for the full replacement?
11) If a loss has been replaced through an insurance company source, will I be allowed to verify proper replacement by an independent firm or accredited appraiser?
12) How much will it cost per thousand for full coverage?
13) How much for partial coverage?
14) What do I sacrifice for the limitations?
15) Is depreciation ever imposed?
16) To what and how is it computed?
17) How often should I have an appraisal update?
18) Am I limited to the appraised replacement cost should there be a sizable increase in the value?
19) If there is damage to a piece, can I replace it or will I be limited to repair?
20) What if the lost item is irreplaceable, like an antique?
21) Are there any security precautions required?
22) If not, would there be a premium savings if special precautions were taken, e.g., the items were kept in a home safe or in a safety deposit box when not being worn?
23) What proof is needed to justify a claim?
24) Are there different kinds of jewelry insurance available?
25) Are there any exclusions?
26) What is the pair and set clause?
27) Will the insurance cover an additional amount for matching a missing item in a set if it has not been computed and stated?
28) What types of property are not covered?
29) Will you show me the actual language in the policy that addresses each concern I have expressed?

... If you do not like the answers to any of the questions, go to another company. It is a big industry so shop around and get what you want and need to provide peace of mind.
... Please keep in mind that these questions need to be asked, for your own protection and understanding in case the unmentionable should happen.

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