Q. Insurance for diamonds
We have insurance through Allstate, but is there a better company with less expensive insurance cost? - Hampton

A. I would first determine what type of policy would be best for you and your family. Generally, I recommend a “Cash Value” or “Agreed Value” policy for jewelry, which can be purchased from Chubb, CNA, Lloyds, or others. It would be best to ask an independent agent this question. This way you know you will collect the “agreed value” of the item; they write a check with no argument. Many insurance companies are selling jewelry themselves and are trying to compete with jewelers on replacement of items. I think this is unethical, because they are trying to argue a value, when they have an interest in the outcome. When an appraisal does not contain all elements necessary for an accurate replacement of “like kind and quality” (which is very common) then those details are up to the insurance company to determine, hence they will replace at a lower value than insured. Remember that insurance companies always win if they can settle a claim for less than the insured value. Most appraisals are so poorly written that they do not contain full details or accurate descriptions. Choosing a good appraiser is very important (see my previous answer on “Appraisals” for more details). The more details the better, because there is less to negotiate in the event of a claim. If the “claim” is already negotiated, as with an “Agreed Value” policy, then there is really nothing to negotiate; they write you a check. The main problem is that so many people are trying to “work the system” to their own benefit rather than play a fair and honest “game.” For example, it is common for a person to see a ring priced at $9000, but which the jeweler will sell for a “good deal” at $6000; to prove it he will write a flawed (and probably fraudulent) appraisal for $12,000, to show what a good deal you really got. (The appraiser, of course, claims that he has no interest in the value, even though he just sold the item. It also lacks details because he thinks he is safer by being vague on the replacement; besides, he is not a Gemologist and doesn’t really know what the quality is in GIA standards anyway.) The person is glad to insure the ring for $12,000 (thinking that the insurance company will actually give him this money), because he can get a “better” ring from the same jeweler if it is lost or just “cash out” and make money on the deal. The insurance company is glad to collect premiums on such an item because they think they can replace the ring for $4500. It works for all parties because everyone thinks they are getting away with something, until there is a loss. When there is a loss, the customer is the one to suffer. He has been paying premiums for $12,000 but he will only receive $4500 or less, for the loss, the price the insurance company claims they can replace the item for. The insurance company may even go through the jeweler to begin with and get the better price (I say woe to the jeweler who gives a better price to an insurance company than a customer; it is wrong but it happens at other stores. Why should a non customer get a better price than a customer?). The insurance company may choose to replace it “in house” whatever that means, in order to lower the costs to themselves. In this event the “replacement” should be evaluated by an appraiser, to determine if it is “like kind and quality.” Just because the insurance company “claims” they can replace an item for less, doesn’t mean it is true. Sometimes it is useful to hire a good appraiser after a claim, if not before. At this point, because a professional did not properly write the appraisal, it is hard to argue exactly what “like kind and quality” really is. This is the determining factor for the claim and is where negotiating with the insurance company comes down to. If the insurance company is replacing with inferior quality, then a good appraiser can determine this. The major retail insurance companies generally do not offer “Agreed Value” policies, and often in my experience do not pay the full value of the claim. I would want to get insurance somewhere else where I know what the terms and conditions of replacements are. This topic is a problem in the insurance industry and ours. I hope my answer has not created more questions than you started with.

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