Overstated, over valued and false appraisals contribute to billions of dollars every year in fraudulent personal property claims. Insurance claims fraud is a real problem for both consumers and insurance companies. Insurance companies have become more concerned about the accuracy and competency of, jewelry, fine art and special personal property appraisals.
Appraisals for jewelry, fine art, and collectibles should outline the compensation a policy holder will receive in the event of a loss. Appraisals also help the insurance company rate the risk and qualify it for insurance coverage.
An insurance appraisal should also:
- Prove you own and you are in possession of the personal property you want to insure.
- Clearly describe and place a value on your personal property.
- Support conclusions of the appraisers’ valuation based on market research and accepted principles.
- Estimate the value of your property.
- Remain current with market changes.
The most important issues for consumers to consider:
- Does the appraisal include replacement costs?
- Are the appraisals current? If over three years old, the appraisal may be inaccurate.
- Does the appraisal provide a complete and accurate description of the personal property?
- If you are insuring a valuable collection, it may be best to have the items individually appraised.
Before contacting an appraiser, homeowners and renters should review their policies and talk about the coverage needs with your insurance agent or broker. Find out what your policy limits are for the kinds of personal property you own or collect. When you know there is not as much insurance on the type of personal property you own or collect you may want to consider your options for insurance coverage.
Your insurance company may require an appraisal before offering to insure the property you own. If you are asked to provide an appraisal take these steps:
- Ask you insurance agent or broker which type of value is required for the appraisal: Replacement cost value or actual cash value?
- Photocopy documentation, old receipts, appraisals, and history of ownership (provenance).
- List the items to be appraised. In the case of artworks, list the names of the artists.
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