A Tale of Loss
Jade, death, theft, substitution, documents —
the makings of a good mystery story.
For some claims, the adjuster must be part sleuth.
Facts of the case:
- A lady’s diamond dinner ring, set with one center nephrite jade, is insured for $5,500.
- The center stone is lost, and the insurer replaces it for a cost of $3,775.
- The insured dies — and someone steals the ring from her finger in the mortuary!
The deceased’s husband files a claim. The insurer has both the original appraisal and the sales slip from the jeweler who replaced the center jade. It seems a straightforward claim.
However, a close reading of the documents shows that the original ring was set with nephrite jade, while the replacement stone was jadeite. These are not two terms for the same thing. Nephrite jade is a very common stone, often not even regarded as gem material. Jadeite, on the other hand, is rare and is worth 10 to 15 times more than nephrite.
The jeweler who did the replacement had substituted — and charged the insurer for — the more expensive material. This resulted in an unintended betterment. Since the sales slip described the stone as jadeite, the jeweler technically had not lied, but he had misled the insurer and taken advantage of the insurer’s lack of expertise in this field.
This insurer’s expert discovers the discrepancy. He notes that the policy covered a ring with the less expensive nephrite, not the replacement stone. In any case, the insurer has no verification that the new stone was, in fact, jadeite or what its value was, since there is no appraisal describing the qualities of that stone. The carrier had already overpaid for the replacement stone, but now the expert, with both jewelry and insurance expertise, can save the insurer from a second excessively high settlement.
Every insurer should hire or have on call an expert to represent its own interests. Such a representative should be knowledgeable about both insurance and jewelry. He can interpret appraisals. He knows what details are used in valuing jewelry and recognizes when important information is missing. He often knows or can determine the general quality of merchandise sold by the various jewelers, which is a useful check against inflated valuations.
The insurer’s expert is independent — he is not interested in selling jewelry to the insurer.
FOR AGENTS & UNDERWRITING
>ACORD 18, Jewelry Underwriting and Claim Evaluation, would have caught this discrepancy. ACORD 18 mentions both nephrite and jadeite, and specifies the necessary descriptive qualities for valuating each.
With jewelry, slight differences in qualities or terminology can greatly affect value. An adjuster using ACORD 18 and other insurance tools could have spotted the jadeite-for-nephrite substitution — though he may not have realized how financially important that difference was. Using an expert familiar with both jewelry and insurance is easier and, ultimately, more economical.
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