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Ring Insurance - Cost v Valuation

Glenagoolie

Hi,
I recently bought an engagement ring in New York through a connection and "believe" I got a good deal. I brought it home and looking to get it insured.
So I got it valued in Dublin and it's value is approx twice what I paid for it, to get the same ring in Ireland.

When I said to my insurance company about insuring it they want 2 things

Proof of purchase
Valuation

I have both things however there's a big difference between the value on the proof of purchase and the valuation report.

Any suggestions on what to do, I obviously want to insure it for it's valuation amount (the cost to replace it in Ireland).

I could get the seller to draw up a proof of purchase without the figures, but is this a 'valid' proof of purchase??

Thanks
Glen

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clint_silver

I read this on the webz a long time ago about insuring jewellery. you agree at insurance take out time what way you wanna do it. Completely up to you.

The value on the policy depends on whether you want to insure your jewelry for its actual cash value, its replacement value or its agreed value.

Cash value is the value of your jewelry at today’s market rate, not at the purchase price.

Replacement value means the insurer will pay you a specific amount according to its current market value at the time of the loss.

Agreed value means that you and your insurer settle on a specific value that you will receive in the event of a loss.

davethe valuer

As a trade professional (I'm an independent jewellery valuer) I'm often asked why can't someone just insure their jewellery for what they paid. There are a number of reasons and scenarios so I'll try and cover them all.

1: A ring purchased at full ticket price without discount in Ireland - This is becoming a rare event these days. In such a situation your insurer should just require a receipt. If they ask for a valuation ask the retailer for it.
2: A ring purchased in Ireland at a discount - You insure this for the ticket price, not the purchase price. Your insurer will negotiate their own discount from the insured amount if theres a claim so if they are starting from a discounted price already the item cant be replaced with something of the same quality.
3: A ring purchased abroad - This will require a valuation done in Ireland. If you buy your ring in New York your insurance company will replace it in Ireland therefore they need to know the ticket price here. There is often huge differences basically due lower overheads, margins and the fact you don't pay VAT (at 23%) when you purchase outside the EU (although you are supposed to declare it and pay the duty when you bring it in). All these lead to to the differences people sometimes find when they get foreign items valued (although twice the value is the exception rather than the rule so well done!).

Insurance companies don't often provide cash settlements in Ireland due to our high occurrence of insurance fraud. Most often than not the will supply replacement jewellery or give you credit to spend at a selected retailer. For this reason the valuation should be like a forensic description and include photos.

With regards to the reason for the request for a proof of purchase. Again, this could be a policy with regards to fraud. A valuation is not a proof of ownership but is simply something that allows an item to be insured, and if lost, aids in its replacement. By seeing both a receipt and a valuation they are probably just making sure the item is in fact yours.

With regards to what level you are allowed to insure something for, in this country you are normally only allowed insure something for its replacement value. Policies that allow cash value or agreed value, while common elsewhere are not normally available in Ireland (although some brokers may be able to negotiate such a policy).

<snip>

Gatica

We got our jewellery valued with Carol Clarke in Dublin. The paperwork she provided was all based on "cost of replacement", i.e. if it's a new item, what would it cost to get the same again, if it's an antique, then its value is based on what she thinks someone would pay/get at an auction for the item.
She explained it well, similar to what dave said. So presumably your insurance should cover it to the valuation cost, but check that with them. Our purchased rings were valued bang on what the cost would've been, but we got them on sale at 30% off and some of them custom made so also cheaper than shop price. They're insured for their value.

Glenagoolie

Hi,
Thanks to everyone for their feedback. I rang FBD and insured the ring. They did confirm they would insure it for the valuation value.

Thanks again all.

Glen

Paul_Hacket

The "valuation" you got on your ring is just a number that the jeweler or whoever you brought the ring to gave you to make you feel good about your purchase. It isn't the "value" of the ring, it is the maximum they believe that you might have paid, and then some. This is done as a gentleman's agreement between jewelers in order to make customers feel good about their purchases.

Where did you get it valued? There are only about half a dozen, or less, properly accredited valuers in Ireland, meaning that they are members of the IRV. They don't work in jewelery stores. What were the qualifications of the person you brought it to? Here's a test, go back to this person and ask them if they would be willing to purchase your ring from you - for 50% of the amount they valued it at. Watch as they make excuses about why they cannot. Then ask them if they would be willing to purchase it for 25% of their "valuation". Again, watch them explain that they cannot. Nor will pretty much anybody else.

Bottom line, "valuations" for diamond rings are kind of meaningless since there is virtually no resale market for them. The replacement value for your ring is probably around the same as what you paid for it. There are no "deals" when it comes to buying diamonds, only degrees to which you are ripped off.

To a considerable degree the insurance company doesn't care about what you paid for it. They only care that you actually do have some kind of ring (i.e. are not trying to scam them by insuring an asset that doesn't even exist) after that you can insure it for what you want within reason. The more you insure it for the more the premium you pay will be. So to answer your original question, there's no need to change any paperwork, the insurance company doesn't care if what you paid for the ring is half or less of the "valuation".

For more info on the valuation of diamonds: http://www.thegemlab-icga.com/sellingyourjewelry.html

and: http://www.theatlantic.com/politics/archive/2007/06/the-truth-about-diamonds/42730/

davethe valuer

Hi Paul. Just thought I'd address a few things you put in your reply to the original post. The ring in question was bought in New York. An insurance company will require a "local" valuation in order to provide cover as the replacement would be sourced from an Irish supplier - most likely a high street retail jeweller with whom the insurer has a good arrangement. While valuations supplied by retailers themselves upping values may seem like a scam, a jeweller supplying a well executed valuation document from an IRV is giving added value to the purchase as they will provide a document that will allow an insurer to easily replace an item.

While you are absolutely correct that there are only a small number of IRV's (Institute of Registered Valuers Member) based in Ireland they actually generally work in the retail stores. The IRV was set up originally by the National Association of Goldsmiths 26 years ago to improve the standard of valuations offered by retailers. While there are a number of independent IRV's in the UK and Ireland the majority still work in the retail trade. There are to my knowledge six IRV's based in Dublin, four work for a well known Grafton Street retailer, one is an independent retailer and one is a full independent valuer not working in retail (myself!). I know I'm probably sounding pedantic but its an important point to clarify.

Valuations are pretty far from meaningless. The actual "value" is only the result of the careful and professional work carried out by the valuer. Most people who purchase at a large discount know they are getting a good deal. The valuation is not there to blow smoke up their proverbial, its there to provide a means to allow the ring to be identified or replaced if lost. This is why insurance companies insist on them as it saves them time (and money) should that arise. While its true that insurance companies are not interested in what you paid for something, what they do want is a full detailed description of what you bought and how much is the full high street ticket price so that they have a point from which they deduct their discount (which is hefty) and the retailer is still able to make a profit.

An, yes, jewellers like supermarkets, corner shops, cafes and dog groomers are businesses and are entitled to make a profit ;-)

Paul_Hacket

Uhm, where did I say Jewelers aren't entitled to make a profit? I'm sure they are, in so far as people find the middle-man service that they provide useful (highly debatable these days but that's another argument).

However a jewellery store is NOT similar to a supermarket or a corner shop. Such businesses sell commodities which are freely available to all on an open market. If I wish to, I can buy potatoes in a supermarket, or if I wish I can go directly to a farmer, or a farmer's co-operative, or a farmer's market, and buy directly there. Furthermore, farmers do not hoard their produce and collude with each other to control the price of potatoes, as De Beers and the rest of the cartel does with diamonds. On any given day the price of potatoes reflects the quantity that are available for supply. Whatever is produced is made freely available to the market. This is the exact opposite of the situation with diamonds, where if all of the diamonds which exist were made available by the cartel that controls the market the price of diamonds would collapse to little more than the cost of cutting and polishing the stones.

As for valuations, and your contention that this person bought at a "discount", that's just laughable. They merely bought at slightly less of an astronomical markup than is otherwise available in the highly controlled diamond market. The valuation may have some meaning in terms of the cost of replacement, however it has zero meaning in terms of the actual value of the underlying diamond - which is exactly why nobody will rebuy a diamond for anything more than a small fraction of the purchase price.

The real problem I have with "valuations" is that it is a technique used by the industry to fool people into believing that they got some sort of "amazing deal". The term itself would seem to imply that the actual "value" of the asset is being ascertained. A more accurate term might be something like "cost to replace this asset if buying from a closed cartel which artficially inflates the price of such assets". That would be more accurate - though admittedly a bit long winded. There's a reason that De Beers does not have an office in the USA - their practices are illegal according to American antitrust law.

If you hadn't realized by now, I'm not a fan of the diamond market. I'm not a fan of a system that encourages young people who are just starting out in life to turn over a considerable proportion of their savings to middlemen in exchange for an asset which has its price artificially inflated by a cartel. I am also not a favor of the not very subtle psychological tricks used by the diamond industry and jewelers in general to encourage ordinary people that they ought to spend thousands of euros on these not-at-all-scarce baubles in order to feel good about their union.

Gatica

I think the OP has already got an answer to his question and has got the insurance which he wanted - to the "value".
Whatever disagreement there may be about what value means. I think it's safe to say the OP won't care anymore at this point...

davethe valuer

Hi Gatica. Thank you, you are absolutely right. And, Hi Paul, fair points, well made.

All I wanted to do originally was correct a statement about IRV's. Maybe my mistake was to wade in and comment on the rest of what was said. I certainly won't make that one again...I think theres a Ron Burgundy GIF that would be appropriate here ;-)