This is a story about how your homeowner's insurance (Liberty Mutual Insurance Company) works when you file a claim for replacement of personal property, like jewelry. (Let me point out that in 18 years of insuring with Liberty Mutual, we have NEVER filed a claim of any kind.) More specifically, it is a tale about a rider policy that we took out on some jewelry a few years ago. This rider was added to our homeowner's policy in the mid-1990's. It covered a list of jewelry appraised by a jeweler known to me at that time and still known to me as honest. My diamond engagement ring, the jewelry at the center of my insurance claim, was purchased from this individual in 1987.
On September 7, while working in the yard, I noticed that the diamond from my engagement ring was missing. I immediately looked throughout the house and yard for it. However, a diamond is a very small item and hard to find under any circumstances, and of course I was not able to locate it. I contacted our homeowner's insurance carrier, Liberty Mutual, and was asked some questions about the loss.in addition, I received some forms to complete by the insurance company. One of these forms ws called a Proof of Loss Form which was to include a written description of my claim along with any receipts, bills, estimates or other documentation. The other form was a Homeowner Loss Information Sheet. I dutifully filled out all the necessary forms and returned them to Liberty Mutual. One of the questions to be answered was about replacement cost of the diamond, which my jeweler completed and returned to me. It was my understanding that the diamond would be replaced at this cost or at least at the 1996 appraisal cost, which Liberty Mutual had in its possession. It was noted on the Homeowner Loss Information Sheet to remember to price the item (s) at today's cost of replace, before taxes. Also, according to the information provided to me by the company representative, there was no deductible with my insurance policy.
The original appraised value of the ring in 1996 was $2100. Replacement cost of the diamond alone, as officially certified by my jeweler who originally sold me the ring, was $2,595. Liberty Mutual sent me a check on or about October 17 for $1350, as you note, NOT the $2,595 value stated by my jeweler. I also received a note from a jewelry company called Insurer's World. This company apparently works hand-in-hand with Liberty Mutual to replace lost jewelry at a far lower price than the appraised value (as you can see). As I found out later, this practice is not illegal at all and is utilized by most, if not all, insurance companies to help keep their costs down. It was explained to me by another individual who works in the insurance industry that since there is such a high mark-up on jewelry, this is what insurance companies do to protect themselves. I think this practice, if not illegal, is certainly unethical. For one thing, it is never made clear to the policyholder that the appraised value of an item is the most an insurance company will pay out. That is ONLY if the item cannot somehow be replaced at a lower cost somewhere else. Apparently insurance companies have symbiotic relationship with certain jewelers.
During the period of time when I was actively gathering information about the diamond and asking questions of the Liberty Mutual representative, she never once explained to me the process and the likelihood that I would NOT receive either the appraised value or the replacement value of the ring. She did assure me that there was NO deductible, however. There could hardly have been a big difference since the check sent to me by Liberty Mutual is nowhere near what I had anticipated. Again, this practice is NOT illegal; but BUYER BEWARE when you are looking to purchase homeowner's insurance, especially with Liberty Mutual.
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