14 | SEPTEMBER 2017 | Claims Magazine | PropertyCasualty360.com
Almost $1.5 billion in jewelry is reported lost or stolen each year, and many of these claims turn out to be fraudulent. Unlike cars, furniture and other insured valuables that
depreciate the minute they leave the store or car lot, fine jewelry often
becomes more valuable.
For that reason, underwriters should
remind agents to obtain updated appraisals every three to five years. Appraisals
should include more than just a dollar
amount. Detailed photos make the replacement process more accurate.
Policyholders can pay higher premiums
with overinflated appraisals since the insurer bases a settlement on the true replacement cost. And, happy policyholders are
more likely to reinsure with your company.
Replace or cash out?
Replacement rather than cashing out offers several benefits:
• It discourages fraud.
• It maintains the insurance premium cycle.
• Replacement often costs less than the
scheduled amount, saving money.
• When an adjuster is presented an out
-of-date appraisal, the article cannot be
replaced within the policy limits, forcing a cash out.
Replacement vs. stated
Since more than 95% of policies are replacement value policies, the current
appraisal is key. Agreed or stated value
policies may end up paying more than
the scheduled amount if the appraisal is
With stated value policies, insurers
must make a cash settlement; however, if
the replacement cost exceeds the scheduled amount, the policyholder will get a
check for the full amount. The appraisal
often offers the deciding factor.
When you suspect a
Appraisals help adjusters spot fraudulent
claims, an unintentional mix-up, or fully
One policyholder reported a chipped
diamond in a covered ring. An inspection
confirmed a chip; however, the adjuster
found it strange that the policyholder had
owned the ring for many years but only
insured it 30 days prior to submitting the
claim. It was determined that the ring was
chipped prior to it being insured. When
confronted, the policyholder abruptly
withdrew the claim.
If a policyholder reports a lost or damaged item, ask how, when and where. If
it is a reported theft, make sure a police
report was filed. If the loss involves damage to a gemstone, ensure the appraisal
does not mention any type of damage –
be sure it happened as a current event.
In the case of a partial loss, such as one
diamond earring, most of the time the
remaining one can be matched with no
need to replace the other, keeping the existing one for salvage.
Other issues to watch for include:
• A high-value jewelry piece with a current appraisal and a claim submitted
shortly after the item was scheduled on
• If an article has a grossly overinflated
appraisal, insist on seeing a sales receipt.
Also consider calling the store where
the article was purchased to make sure
it wasn’t returned. If the purchase was
made online, insist upon seeing a credit
card receipt and check to ensure it
• If a replacement service indicates that
the item can be replaced at significantly
less than the appraisal shows; that
should raise a red flag. In these cases,
the claim should be turned over to the
insurance carrier’s Special Investigative
Current appraisals keep costs down,
and aid in detecting fraud – benefits to insurers and policyholders.
Alan H. Fisher ( Alan@Caimlink.com) is
president/CEO of Claimlink Jewelry
Current Jewelry Appraisals
Can Reduce Fraud