The carrier offered $9600 for the ring since that is the cost of a replacement through its preferred replacement cost vendor. The insured believes that he purchased a replacement cost policy for the “retail” value of the ring. They bought this ring in a retail establishment and would like to purchase this ring again at a retail establishment. The insured believes that he is entitled to be paid the retail value of the ring since that is what he has access to and not the wholesale value of the ring.

Indiana Subscriber

If you look at the endorsement for scheduled property, it reads as follows:

“The value of the property insured is not agreed upon but will be ascertained at the time of loss or damage. We will not pay more than the least of the following amounts:

(a) the actual cash value of the property at the time of loss or damage;

(b) the amount for which the property could reasonably be expected to be repaired to its condition immediately

prior to loss;

(c) the amount for which the article could reasonably be expected to be replaced with one substantially identical to the article lost or damaged; or

(d) the amount of insurance.”

If the carrier can replace the item for lesser cost, it has the right to do so. It insured a 1.5-carat E color SI1 diamond; as long as the insureds get another 1.5-carat E color SI1 diamond, the value on the original appraisal makes no difference. A quality appraisal doesn't give a dollar amount since those amounts fluctuate over time; it accurately describes the insured article in detail. Just because the insured overpaid for a stone doesn't mean the carrier has to as well. You may find the newsletters from these folks helpful: http://jcrs.com/