With this in mind, it is helpful and instructive to look at a few real-life specialty item cases and review some of the resources and techniques available to help adjusters deliver an accurate valuation that leaves the insured satisfied.

An insured claimed that his special edition golden railroad spike that had been stolen was valued at $3,000. (Photo: Shutterstock)

The case of the golden spike

While the spike that joined the Union Pacific and Central Pacific railroad lines to form the first transcontinental railroad in the U.S. on May 10, 1869, had unquestionable value—how much would a golden commemorative replica of it be worth?

That was the question one claims adjuster had to tackle when the insured, a train enthusiast, listed a special edition “golden spike” Winchester rifle made in 1969 to commemorate the 100^th anniversary of the historic event in a claim. The insured claimed the item was worth around $3,000.

Complicated investigation

Further complicating the investigation, the item had been stolen, so it was not possible to evaluate the physical dimensions or the gold karat used in construction of the piece. However, the piece was estimated by the insured to weigh about three ounces, measure four inches long and a half-inch square, with a sharp tip and a broader top (resembling a smaller version of a railroad spike).

It was determined by the specialist that the use of 24-karat gold was unlikely and three ounces of 14-karat gold would be worth around $1,700. However, if the item was constructed using solid gold at the dimensions given, it would weigh more than a half a pound, three times the estimated weight given by the insured.

Some research into the matter revealed that Winchester did manufacture a commemorative rifle but not with a “golden spike.” Further, it was determined the item was more likely made by Colt Industries, which made one in 1969. Gun and historic memorabilia dealers confirmed the spike made by Colt matched the size and description given by the insured and was gold-plated, not solid gold. The value of the spike was determined to be $35.

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Adjusters have to weigh the cost of replacement against the cost of repairing a damaged item and the impact it will have on the overall value of the piece. (Photo: Shutterstock)

Saving a precious Hummel

A claims adjuster was called to the scene when an elderly insured found her prized 36-inch jumbo Hummel was damaged with a sizable chip missing. The discontinued item was determined by a contents specialist to be valued at close to $30,000 and a choice had to be made whether to offer a full replacement or attempt a repair. The adjuster chose the latter option and the insured was delighted to find the item could, in fact, be repaired to its former glory.

A conservator was found for the task and the item was sent to them using a special fine arts shipping option. The restoration cost was $3,400 and the diminution of value after the repair was estimated at ten percent of the value of the piece ($3,000). Final reimbursement to the insured was $6,400. This case was a win-win for all involved—the loss was mitigated while the customer was pleased with the result.

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Since specialty items vary significantly from claim to claim, adjusters will need to utilize flexible strategies. (Photo: Shutterstock)

Striking a balance

As these two cases make clear, one-size-fits-all techniques seldom work with specialty items. Each specialty item claim is a unique case and adjusters need a variety of technology tools and specialty services to handle them. Access to a comprehensive contents database can give adjusters an edge in handling the process. This technique is particularly effective for family heirlooms that have significant emotional value for the insured.

Because the types of specialty items vary widely from claim to claim, adjusters and carriers need to employ flexible strategies which incorporate various levels of expertise for each claim.

These can include:

Self-service options for small claims: In claims where the items number less than 20, the insured should be given a range of options to self-submit an inventory themselves including via traditional paper, phone and internet. For claims first notice of loss (FNOL), millennials especially favor 24/7 online do-it-yourself options where they can attach supporting documents, choose payment options and redeem payment. Empowering policyholders to self-submit small claims allows adjusters to focus on more complex cases.

Experts for large losses: In larger cases such as catastrophe events, field inventory can be handled by experts trained at reconstructing devastating losses such as when homes suffer significant damage down to the foundations. When unique and specialty items are discovered, they can be sent to specialty experts for proper valuation.

Specialists for specialty items: Having a dedicated team of claims specialists to properly research and assess the value of specialty items like antiques, fine jewelry and artwork or a prized comic book collection, makes the entire claims process more effective. Customers are satisfied knowing their most prized items are evaluated by experts and restoration services can be secured without delay.

Insurers have a number of options when it comes to handling specialty contents for a claim. Third-party vendors can frequently provide customizable options that provide valuation and restoration expertise, as well as aid in expediting the settlement process. Providing policyholders with accurate information on their claims and returning them to their pre-loss status is the goal for insurers and vendors alike.

Joel Makhluf is a vice president at Enservio and the director of the Property Innovation Summit, the insurance industry's premier thought leadership conference. Enservio is a leading provider of contents claim management software, payments solutions, inventory and valuation services for property insurers. Contact Joel at [email protected].