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Are Jewellery Valuations and the insurance you pay a rip off?
I have been a manufacturing jeweller for 20 years and have done thousands of valuations during my career. I have always felt a bit suspect about jewellery valuations. In my opinion insurance companies take customers for a ride.
Let's say you buy a ring from a high end jeweller in Sandton and you pay R10 000. You ask for a valuation and you get one for the price you paid. (The same item may be cheaper elsewhere?) You then ask your insurance company to insure your diamond ring. They quote you a premium which for the next amount of years you pay diligently. Hopefully you are re-valuing your ring every couple of years to keep it in line with inflation and current prevailing prices. Your premium also gets adjusted.
Come the day you lose the ring you put in a claim for the item. This is when the scam starts. You cannot (in most cases) ask for the cash - and there is a very good reason for this. The insurance company has jewellers who do the insurance replacements for them. They also specify which store you can visit to replace. You have to ask yourself why?
I know, because as the only manufacturer of titanium and combination gold/platinum and titanium jewellery, the insurance company is forced to deal with me. The first thing the insurance company asks for is a discount - and not 5% or 10% - they want to pay the jeweller 30% of the claim value. If you are not willing to give them the discount then they look elsewhere. They do not request a discount - They flat out state that if you do not work to their terms than you will not get the order.
Now my question is - why if you have paid a premium on R10 000 do they replace for far less than that. It means that you are over paying on your premium. I have nothing against the insurance company looking for the best price. My problem is that when they take your premium they know they will be able to buy it for far less. If you do not believe me - ask for the cash - or ask that they use the jeweller of your choice. It will not happen.
They collect the premium for R10 000 and know they will pay far less come the day for replacement. If you have not kept your valuation up to date they will not cover the replacement amount. If it is over valued they will not give you the difference.
Now I am not sure about other industries - but I am pretty sure that it works the same. Remember that if you buy from a retail jeweller you are already paying a hefty premium due to the mark ups the high end stores need to stay in business.
When I do a valuation for a customer I ask - do you want a high valuation (usually to show off to the wife how much they have spent) or a low valuation - IE; a true replacement value. I know what I can replace the item for - they have just paid me that amount. A valuation for insurance will have to be a lot higher in case they cannot get it re-made by me, Which ever way the client decides he will lose - too low and the insurance company will not replace - too high and you are whacked on your premiums.
Again the consumer suffers and the big guys take all the cheese. Even the jeweller who is replacing does not make a lot - he has been pushed right down on price.
Anyway,with regards to valuations and jewelry purchases - my advice is to buy as close to source as you can, and to ask your insurance company what their policy is. Keep your valuation or jewellery appraisal to a realistic amount and keep you premium down. Keep it up to date - best to update every year especially if the Rand/Dollar has moved significantly.