Appraisals Can Prevent Major Disappointments
When providing inventory services, we often ask if clients have appraisals for high value contents. This question is due to the possibility of being underinsured for a specific item or a collection that might exceed the coverage limits on a standard insurance policy.
An interesting article in ClaimsJournal.com supports our standard process of discussing the importance of having an appraisal and other documentation. The article explained that a policyholder had a house fire and was claiming the loss of a Remington conversion rifle that had been used in the Civil War. He stated that is was in “pristine” condition and that a professional arms dealer told him, sight unseen, that “the 1812 muzzle-loaded conversion rifle would be worth approximately $40,000 to $50,000.”
Documentation is extremely important, and unfortunately the musket was purchased 20 years prior at an estate sale. He was unable to provide the seller’s name, which would have enabled the insurance adjuster to collect some much-needed information for determine fair value. Nor could the homeowner remember what he paid for the rifle, he didn’t have an invoice or any other supporting documents, and he didn’t have close-up photos of the rifle to show condition. There was one photo – the rifle hanging on a fireplace mantle; however, this photo only proved ownership but was not sufficient enough to show condition.
Through comparable firearms sales of like, kind, and quality (LKQ) rifles in the retail sector and auction sales, the adjuster determined that a reasonable replacement value was $5,300. Had this policyholder obtained the provenance when purchasing the rifle, taken photos, and obtained an appraisal, he would have known the true value prior to his loss. Was it worth $40,000 or was the true value $5,300? There is no way after a fire (or other disaster) to know. The policyholder had no documents to back up his $40,000 claim, so he had no choice but to accept the amount offered by the insurance company.
This story, and many similar ones, support the importance of having an inventory of collectibles. Not interested in a whole-house inventory? One of our specialties is Collectibles Inventories.