Unpacking your Homeowners Policy: Part 4 – Understanding Scheduled Property Claim Settlements
When it comes to scheduled personal property—items like jewelry, watches, furs, and other valuables—many homeowners assume that if they have an appraisal, they’ll receive that exact amount in a claim settlement.
That’s not always the case.
While some insurance companies offer agreed value policies—where they pay out a set amount for a covered loss, most insurers follow a different claims process. Understanding how your claim will be handled is critical to avoiding surprises when you need to file one.
How Insurance Companies Handle Scheduled Property Claims
If you experience a loss—whether it’s theft, damage, or mysterious disappearance—your insurance company will typically offer two options for settling the claim:
- Replacement with a Like or Similar Item – The insurer will replace the lost or damaged piece with a new one of comparable quality and value.
- Cash Settlement – Instead of receiving a replacement, you opt to receive a payout for the value of the lost item.
Most policyholders don’t realize that Insurance companies can replace jewelry and other valuables for much less than you can. Therefore, if you take a cash payout, it will likely be LESS than the appraised value.
Why a Cash Settlement Might Not Match Your Appraisal
Let’s say you own a heirloom ring that was recently appraised for $9,500 and insured on a scheduled property endorsement with a $0 deductible.
If the ring is lost, the insurance company will give you two options to settle the claim:
Option 1: You Choose a Replacement – The insurer will have a new ring custom-built or purchased at wholesale costs, ensuring you receive a comparable piece at their expense.
Option 2: You Take a Cash Settlement – However, instead of providing a full $9,500 payout, the insurer determines (in this scenario) that they could have replaced the ring for 20-25% less than retail. In this case, they may only issue a check for $7,600—not the full $9,500.
This isn’t because they’re shortchanging you. It’s because their obligation is to indemnify you—not to provide a windfall.
What This Means for You
The purpose of scheduling valuable items on your policy isn’t to profit from a loss—it’s to be made whole. If you truly want to recover the full insured amount, you must take the replacement option.
Many policyholders don’t realize this until after they’ve filed a claim and opted for cash, only to find they receive less than expected. If you plan to take a cash settlement instead of a replacement, understand that the final payout may be lower than your appraised value—because insurers base their valuation on wholesale replacement costs, not retail price.
Finally, you should consider getting new appraisals every few years and reviewing policy coverages during your policy annual reviews,
Final Takeaway: Know Your Options Before You Need Them
Before you schedule valuable property under your home policy, ask your insurance provider:
- Does my policy settle at agreed value or replacement cost?
- If I choose a cash settlement, will I receive the full appraised amount?
- What is the process for replacing lost or stolen jewelry, watches, or collectibles?
Understanding these details before a loss occurs ensures that you’re not caught off guard by unexpected settlement amounts.
Because when it comes to insuring your most valuable possessions, clarity now can prevent frustration later.