Jewelry Insurance Claims

Intro

While Insurance may not seem like the most thrilling topic, when it comes to your jewelry, insurance choices are extremely important! Read on and hopefully I won’t bore you but empower you to make the right decision. I was recently asked to speak at the Arkansas Adjusters meeting as well as The Central Adjustment Company. I was able to speak on who I am and what I do as a gemologist and what I have experienced with different Jewelry policies. Through my preparation for this meeting, I was able to learn so much more about jewelry insurance policies and I want to go ahead and share this knowledge with you!

Jewelry Appraisals

When someone purchases an item of jewelry of high value, (let’s say over $5,000) It will typically need to be appraised for insurance purposes. And, not only does this item need an appraisal, but most companies require this item to be seen by a G.I.A. Graduate Gemologist. This appraisal will help the insurance company that you choose understand what you own and what they are insuring. In one of my blogs that can be read HERE I went into how I appraise jewelry for my clients and how important it is to have a graduate gemologist certify and appraise an item of jewelry .

Policies

Once you have the appraisal you will need to look for an insurance policy to insure your item of jewelry. There are many companies out there that will insure your jewelry. To name a few; USAA, State Farm, Geico, Jewelers Mutual and many others. In my recent experience I have learned a lot about these individual companies and what they can offer.

I know this isn’t something we like to talk about, but, what happens to your item of jewelry when you have to file a claim? What happens to your jewelry when it is either lost stolen or damaged? We don’t like to think about these tough situations, but allow me to tell you they happen more frequently than you think. It’s definitely sad to hear and see, but that’s why we pay for insurance. The issue here is what exactly are you paying jewelry insurance for? How will the insurance company compensate you? Will the insurance company remake your “exact” ring? Or will they make a “similar” ring for insurance replacement? What if you don’t want another piece of jewelry, but instead want monetary compensation? Will the insurance company give you cash for the lost, stolen or damaged ring? Let me tell you, these are all amazing questions and the answers to which will help you understand what will happen in the event of an incident.

Jewelry Insurance Replacement Policy

Jewelry insurance replacement is one of the outcomes of an item that is lost, stolen or damaged. With this type of policy, the idea is that your insurance company will remake what you had before based on the description in the jewelry appraisal. Let’s take a look at an example. A client purchases a diamond that is mined in Canada called a Canadian Marked Diamond. The name of this specific type of diamond is written on their appraisal and then they present that to their insurance company and the diamond is insured. Down the road, the client’s ring is stolen and needs to be replaced. There will be a huge difference in the claim if the insurance policy states that they can replace the diamond for the “exact diamond” as opposed to replacement with a “like diamond” Why does it matter? After all, a diamond is a diamond. Not to someone who purchased a Canadian Marked diamond. This client specifically chose this diamond because they know it has absolutely no conflict issues. Now if the insurance carrier say’s that it can be replaced with another Canadian Marked diamond, then great! However, due to loose terminology in a contract, some insurance companies could replace the Canadian Marked diamond with a regular diamond with similar cut color and clarity and carat weight. So, do yourself a favor and make sure that your replacement policy says that they will replace your jewelry for the exact item, and not just something like it!

Now not all insurance carriers will do this, because they simply don’t know the difference. Most insurance companies do not specialize in diamond and gemstone jewelry. That means they don’t necessarily understand what the minor differences are in the industry. Which is why you should look into specialty jewelry insurance companies, such as Jewelers Mutual and Berkley to name a few. These specialty insurance companies know how to replace your item of jewelry exactly the way it was written and seen when you bought it. So, please do your research and choose the right company, choose a company that will give you exactly what you lost and not just something “like” it.

Jewelry Insurance Reimbursement Policy

Jewelry Insurance reimbursement policies do exist and are used in cases when the insurer doesn’t want to replace what was lost, stolen or damaged. You will have to intentionally find an insurance company that has a cash-out policy because not all do. Now let’s say an incident happens and you don’t have your diamond ring anymore. Your ring is insured for let’s say $10,000 and you have a cash-out policy. Will you automatically receive the full amount of the jewelry policy in cash? The short answer is no. The insurance company will go out on their own to see what the lowest option of replacement for your diamond would be, and they will give you that amount in the form or cash or check. You may be thinking, “well, I purchased that diamond ring for $7,000 and it was appraised for $10,000, so I want that full $10,000 amount.” Unfortunately, that’s not how insurance companies will value a reimbursement policy. The company with send representatives out to ask many different jewelers who they partner with what the lowest price would be to purchase a ring to replace the lost or stolen one listed in the policy. If they come back at $6,000 or even lower so as to be closer to the jewelers cost, then that is the value of the reimbursement you will receive. Well, that’s not what you want to hear, right?! How could your insurance company reimburse you for so much less than what you originally purchased it for? These large insurance companies are well connected and have numerous jewelers contacts. Their goal is to find the lowest price possible. That’s why I would advise against going with a cash-out or reimbursement policy. Realistically, it rarely pays out well, and especially not to the value seen on an appraisal, as the insurance companies will always look out for their better interest.

Fraud In Insurance

Now, the last thing I want to do is give anyone any fraudulent ideas here! I simply want to educate you on what is happening in the industry, so you can be aware of what insurance companies are dealing with. Unfortunately, jewelry fraud is a huge problem in our industry. Jewelers are well aware of it as well as insurance companies and their agents. Because of fraud, jewelry policies and claims are highly scrutinized. There are some people out there committing insurance fraud by purchasing then “losing” their item. This is highly illegal and highly unethical, and it’s sad but it does happen. For example someone will purchase a ring for $7,000 (I might add, often purchased with a stolen credit card) then turn around and find a reimbursement insurance policy to insure their ring. Then an “incident happens” and their ring is either lost or stolen. In reality, the crook still has it and is preparing to sell it. They find a dealer and sell the diamond for $3,000. They file their claim, and the insurance company says they will cash out the policy at $6,000. So this person then takes the $6,000 from the insurance cash out and the $3,000 from selling the diamond and now has a total gain of $2,000 (or $9,000 if the credit card was stolen.) It’s so sad and unfortunate to even think this could happen. Unfortunately, this happens more than you would think. Insurance companies work with insurance adjusters, local police, private investigators, pawn shops, and diamond dealers to monitor what has been bought second hand. Insurance fraud is a criminal offense and this criminal in our example when caught will spend anywhere from 1 to 15 years in federal prison. Okay, I think you get the idea, fraud bad don’t do it!

Filing a Claim

Let’s say now you have worked with your insurance provider and they sent an adjuster and you have finally received the green light to replace your diamond ring. Let me be the first to say congratulations! You finally got through the hard part and you are now ready to find someone to help you recreate the beautiful ring you had! Most likely you may want to work with the original jeweler who created the ring for you. However, what if jeweler you worked with before doesn’t exist anymore? Or what if you weren’t happy with the service of the jewelers or the price you paid the first time and you want to try someone new. You certainly don’t need to go with that initial jeweler for your insurance replacement. The Insurance company will ask you who you would like to work with to replace your diamond ring? At this point either the insurance company will work with that jeweler directly for a “replacement”, or they will give you the “cash out” check. Both amounts honestly are about the same. How are the amounts the same you may ask? Well, Jewelers are very competitive when we receive an insurance replacement quote request. Because we know the insurance company is going to shop around. So, in hopes of winning the sale we cut profit to make the deal happen. Likewise, in a reimbursement policy, the same happens except you receive the check and not the jeweler. When jeweler receives the check they start making the insurance replacement diamond ring. When you receive the cash out policy on your old ring you start looking for a jeweler to remake it for you.

If you are in the position to replace a lost, damaged, or stolen piece of jewelry and you are looking for someone to skillfully remake it, I would be honored to help you. I’m a G.I.A. Graduate Gemologist, and coming from a family of jewelers, I have been involved in the jewelry industry my whole life. I have much experience with both insurance companies as well as remaking diamond and gemstone jewelry. I’m located in downtown Little Rock, Arkansas. So, please reach out to me, I’m here to help you in any and all of your jewelry needs.

Conclusion

Thank you for taking the time to read through this, and my other blogs. I do truly believe in my mission statement; To help people understand diamonds and gemstones so they can make an informed decision when buying or selling jewelry. I wrote this and my other blogs to shed light on an otherwise hidden industry. My hope is that you read this, and it empowers to make the right decisions when purchasing a jewelry insurance policy. The world is changing very fast, and it’s important to protect your valuable assets. So, please insure them so that when an incident happens you can replace what you had.

Than you again for your time. I hope you enjoyed this blog on insurance claims. If you need help navigating through jewelry insurance policies, please give me a call! I wish you all the best.

Thank you,

David F. Homsy

G.G., A.J.P.