• Report: #117240

Complaint Review: Liberty Mutual Insurance Company

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  • Submitted: Thu, November 11, 2004
  • Updated: Thu, August 25, 2011

  • Reported By:Pittsburgh Pennsylvania
Liberty Mutual Insurance Company
1550 Omega Drive Pittsburgh, Pennsylvania U.S.A.

Liberty Mutual Insurance Company uses bait and switch technique to fool policyholders into thinking that jewelry appraisal value will be claim amount Pittsburgh Pennsylvania

*Consumer Suggestion: Insurance

*Consumer Comment: Not buying the explanation

*Consumer Suggestion: Why pay more?

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This is a story about how your homeowner's insurance (Liberty Mutual Insurance Company) works when you file a claim for replacement of personal property, like jewelry. (Let me point out that in 18 years of insuring with Liberty Mutual, we have NEVER filed a claim of any kind.) More specifically, it is a tale about a rider policy that we took out on some jewelry a few years ago. This rider was added to our homeowner's policy in the mid-1990's. It covered a list of jewelry appraised by a jeweler known to me at that time and still known to me as honest. My diamond engagement ring, the jewelry at the center of my insurance claim, was purchased from this individual in 1987.

On September 7, 2004, while working in the yard, I noticed that the diamond from my engagement ring was missing. I immediately looked throughout the house and yard for it. However, a diamond is a very small item and hard to find under any circumstances, and of course I was not able to locate it. I contacted our homeowner's insurance carrier, Liberty Mutual, and was asked some questions about the loss. In addition, I received some forms to complete by the insurance company. One of these forms ws called a Proof of Loss Form which was to include a written description of my claim along with any receipts, bills, estimates or other documentation. The other form was a Homeowner Loss Information Sheet. I dutifully filled out all the necessary forms and returned them to Liberty Mutual. One of the questions to be answered was about replacement cost of the diamond, which my jeweler completed and returned to me. It was my understanding that the diamond would be replaced at this cost or at least at the 1996 appraisal cost, which Liberty Mutual had in its possession. It was noted on the Homeowner Loss Information Sheet to remember to price the item(s) at today's cost of replace, before taxes. Also, according to the information provided to me by the company representative, there was no deductible with my insurance policy.

The original appraised value of the ring in 1996 was $2100. Replacement cost of the diamond alone, as officially certified by my jeweler who originally sold me the ring, was $2,595. Liberty Mutual sent me a check on or about October 17 for $1350, as you note, NOT the $2,595 value stated by my jeweler. I also received a note from a jewelry company called Insurer's World. This company apparently works hand-in-hand with Liberty Mutual to replace lost jewelry at a far lower price than the appraised value (as you can see). As I found out later, this practice is not illegal at all and is utilized by most, if not all, insurance companies to help keep their costs down. It was explained to me by another individual who works in the insurance industry that since there is such a high mark-up on jewelry, this is what insurance companies do to protect themselves. I think this practice, if not illegal, is certainly unethical. For one thing, it is never made clear to the policyholder that the appraised value of an item is the most an insurance company will pay out. That is ONLY if the item cannot somehow be replaced at a lower cost somewhere else. Apparently insurance companies have symbiotic relationship with certain jewelers.

During the period of time when I was actively gathering information about the diamond and asking questions of the Liberty Mutual representative, she never once explained to me the process and the likelihood that I would NOT receive either the appraised value or the replacement value of the ring. She did assure me that there was NO deductible, however. There could hardly have been a big difference since the check sent to me by Liberty Mutual is nowhere near what I had anticipated. Again, this practice is NOT illegal; but BUYER BEWARE when you are looking to purchase homeowner's insurance, especially with Liberty Mutual.

Deb
Pittsburgh, Pennsylvania
U.S.A.

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This report was posted on Ripoff Report on 11/11/2004 05:25 AM and is a permanent record located here: http://www.ripoffreport.com/r/Liberty-Mutual-Insurance-Company/Pittsburgh-Pennsylvania-15241/Liberty-Mutual-Insurance-Company-uses-bait-and-switch-technique-to-fool-policyholders-into-117240. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.

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#1 Consumer Suggestion

Insurance

AUTHOR: Divo366 - (U.S.A.)

The point of insurance is to make you whole again.  Not better off, or worse off, but exactly the same as you were before.  If you paid $2000 for a diamond, but in having a contract with a large wholesaler, Liberty Mutual can get the same diamond for $1000, how is that cheating you?  They are attempting to make you whole again.  They gave you enough money to get the exact same diamond from their contact as you had before.  Why wouldn't you take it?  Or, do you just feel bad not giving the (overpriced) business to your jeweler friend?  They are helping to make you exactly as you were before, and not just cutting you a check; is that wrong?
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#2 Consumer Comment

Not buying the explanation

AUTHOR: sassafras - (United States of America)

What is the point of an appraisal for "insurance purposes" and insuring an item for that amount (and paying the premium) if the insurance company won't honor it if something happens to it?  At the very least, insurance companies/agents, should disclose this to consumers before they buy these riders or make claims.  There is no sense filing a claim if it isn't likely you'll recover; all that serves to do is jack up your rates for having filed the claim in the first place, irrespective of whether or not you were paid out or made whole.  I'm having the same problem with Liberty Mutual right now.  My ring was stolen; I presented them with the appraisal done for "insurance purposes" and sure as

I sit here, I'll be lucky if I get anything reasonable for a ring that they get to appraise themselves, sight unseen. It isn't a question of having overpaid as the rebutter commented; the ring was appraised by a professional.  So on that basis, yes, I do think insurance companies are a rip off. 

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#3 Consumer Suggestion

Why pay more?

AUTHOR: Nick - (U.S.A.)

Speaking as an insurance professional, although not with Liberty Mutual, everything you have been told is true, legal, and whether you knew it or not, just the way it works.

First, tell me how much 1 carat of diamond is worth. You cannot, because there is no guide available to consumers, and therefore jewelery stores can charge whatever you are willing to pay.

But when you go car shopping, you can acquire an NADA guide as the basis for your purchase. If your insurance claim involves a power surge on your 27" TV, you can prove the cost of replacement at any Circuit City or Best Buy. Unfortunately diamonds are a scam, and their base price is controlled by the DeBeers cartel in Africa.

Now, the most important part of the appraisal for insurance purposes is the item description. This way they no what you had, so that they can replace it with what you had. I would write a rip-off-report about the person who over-charged you for the ring in the first place. When I chose to get married, as an informed consumer, I sought out the very ring necessary from a diamond wholesaler for thousands less than Kay or Whitehall or Littman's would charge. Same ring, less money, why pay more?

So getting back to your policy, all insurance fire policies show an insured amount that is the "maximum" coverage for your property, not the minimum. But if that property can be replaced for less, why would an insurance company pay more? In the case of jewelery, most insurance companies use wholesalers for this most important reason: to save you money. To save us all money. Why would they ever pay $3000 to replace a $2000 item. Just because you over-paid, and do not listen to your jeweler on this one, don't expect an intelligent corporation like Liberty Mutual to over pay if they do not have to.
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