Recently, I was talking with a colleague, and we concluded that there was a substantial disconnect between the sales & claims departments of many insurance companies. Clients are often signed up without knowing the specific limitations of the policy. They are, instead, left to read T&Cs written in the most obscure form of legalese.
One aspect of insurance that few people seem to know about but causes the most consternation, especially when it comes to watches, is ‘Betterment’.
So what exactly is betterment? Simply, it ensures that a lost or stolen item cannot be replaced with something that is ‘better’ than what they had.
Sounds straightforward forward, doesn’t it? So why does it cause so much confusion? Well, the term ‘new for old replacement’ is the reason and the belief that it means exactly as it sounds. Sadly, when it comes to watches, it doesn’t.
The example I often use is a nondescript gold watch. It’s from the ’80s and weighs 90g. The model of watch is still made, but it’s been tweaked slightly over the years and now weighs 120g. Betterment means you couldn’t replace the old watch with the new one, as you would benefit to the tune of 30g of gold that you didn’t have originally. It works in reverse as well; an insurance company couldn’t replace your 120g watch with a 90g watch.
That is a simplistic take on it, as watches are considerably more nuanced. Changes in proprietary metals, manufacturing, movement specs and so on will push most watches into betterment.
The whole situation is not helped by some brands having the laziest design teams in the world. They are glacial in their speed of change. You can put a 40-year-old watch next to a modern one, and they look almost identical. So people assume it’s the same watch, but underneath, it’s very different.
Now add in inexperienced & unqualified hobbyist valuers, who not only don’t understand watches or insurance companies and disaster swiftly follows. The insurance company assumes the policyholder has read and understood the T&Cs. The policyholder thinks ‘New for old’ means exactly that. Hobbyist valuer thinks that, but they also think they can’t be wrong as a valuation ‘is just an opinion’.
What inevitably happens then is a claim swiftly declined on the grounds of betterment. How do I know? Because I get phone calls from very angry people who give me chapter and verse of how they think their insurance company is trying to rip them off. And asking me to provide a post-loss assessment, because they don’t like what the insurance company have told them. When it’s the betterment clause, doing its thing.
This is a recurring issue that can easily be avoided. Don’t assume your insurance company knows what you have or how you’d choose to replace it. Ensure your watches and jewellery are valued by professional valuers who understand what market is the most accurate to replace the piece in question. So, if a claim does happen, not only will your valuation leave no room for confusion, but it will also ensure the state figure is accurate for the piece.
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