Grand piano Insurance dilemma

I would love to hear other opinions on an insurance replacement dilemma. My insurance will pay $17000 to replace my grand piano but only $9000 cash if I don't replace it. The original piano was a good older one that had been rebuilt so there was a big difference between replacement and depreciated value. I had bought the piano 15 years ago for my son who now uses only his yamaha keyboard hooked up to his computer and is heading off to college anyways. There is no reason for us to replace this piano but I hate to just take the cash and walk away from $8000 in value. Should I buy a piano for $17,000 and then try to re-sell it? Someone suggested that Yamaha would be the easiest to resell. The insurance will even pay for taxes and delivery on top of the $17,000. Any thoughts? Would anyone be interested in picking out a grand piano that I could buy and then re-sell to them for a discount? My insurance doesn't care if buy it used or new. It can even be from a private party. I am near Chicago.

Talk to a dealer about a quick-flip deal, you should be able to do well.

I don't understand.....what happened to your piano???? Was it damaged or destroyed?

And pardon me for a momentary thread-swipe but is there an insurance company that is everyone's choice for insuring a big-money piano?

Mark,

I have been recommending Heritage Musical Instrument insurance for many years now to my clients. I have people that buy from me all over the world and there is a difference in insurance. Read your binder folks.

I am not saying that YOUR homeowner's policy is not adequate, but I can say that Heritage (they specialize in fine musical instruments) will not give you an ounce of a problem if the unthinkable happens - food for thought.

Full Disclosure - I have no affiliation in any way with Heritage. I just like how they do business.

Here are my thoughts and they are worth what they cost…

Insurance companies have the upper-hand. They are pro’s at protecting their interest and know what they are doing. There is a reason they have offered you the cash option vs. replacement option.

If I were in your shoes, I’d opt for the cash settlement, especially if you do not really want to replace the piano and are no longer interested in the piano as a musical instrument. If you chose to go with the replacement piano and then try to sell it, I’d be inclined to buy a later model, used piano of a highly recognized and popular brand name (you mentioned Yamaha, but there are others). Even then, you are going to have to go through some effort on your part and likely experience some aggravation, frustration and risks in advertising, marketing and selling the piano to get the bigger benefit. Remember, pianos are a heck of lot easier to buy than they are to sell.

If you buy new and then try to re-sell, the initial depreciation will likely evaporate any gains you may be expecting.

Either way, I wish you the best of luck.

Rick

Thanks Rich!

The bathroom above it flooded while we were on vacation. We have state farm and they have been very good about paying for the piano. We hired our own appraiser and they offered us the list price of a replacement piano which is way more than they needed to pay.

I'm not understanding your question. Where is the "list price" coming from?

I have an older Yamaha Grand, but the picture in my safe deposit box is a photoshopped Steinway D. Bring on the fire! LOL

Our appraisal showed a list price for the replacement and an actual price after dealer discounts. There was $5000 difference and the insurance paid the higher of the two values which really surprised me. I am very happy with the $17000 the insurance offered to replace the piano. I thought it was more than what they needed to pay. My original question was should I buy a replacement and try to sell it or take the cash offer. If I buy a replacement what should I be looking for that I can easily re-sell. What is the most popular or the most desirable used piano in that price range? I have time to look since I have two years to replace the piano.

Not to be too puritanical here, but insurance is designed to allow you to replace your possessions, not figure out a way to game the system so as to maximize the cash you can get. If you want cash instead of a piano, take the cash the insurance company is offering. If you buy a piano, you are probably going to have to resell it at a loss anyway. Why buy hassle?

I would be glad to sell you my piano for $17,000 and buy it back for $16,000. So would a dealer.

>I would be glad to sell you my piano for $17,000 and buy it back for $16,000. So would a dealer.

I'm not so sure a dealer would do that, since his piano is not "new" anymore after that but 2nd hand.

But I agree there are probably plenty people willing to go this route.

Who said new? A used S&S would be good for a dealer.

Thank you for saying it first. No wonder insurance premiums rise steadily for people like me who don't even have claims.

But if our OP wants to go ahead and game the system, let him try. Selling a piano privately is difficult, and takes a long time. Moreover, he has been told that his list price $17,000 replacement piano really sells for $12,000. So if he tries to sell it himself, he'd be starting at $12,000 and then discounting from there. If he winds up with $9,000 after a few months of trying to sell it, it would convince me that sometimes there is justice for knaves.

I agree that it will take some work on my part but for $8000 in value or even half that amount it seems like it would be worth my time. (I am have extra time at the moment.) I did think through the ethics, i.e. "gaming the system", but decided if I take the risk to buy a piano and make an effort to find a buyer then I have fulfilled the ethical (and legal) obligation that is required.

I think working with a dealer might be easiest; and it could simply be as honest as buying a piano and selling it back to the dealer later (need cash now, ya know). But I have a question... if you go with the replacement route, what happens to the damaged piano? Does State Farm take it from you? Are you expecting to end up with no piano?

State farm has paid $300 to have it disposed of but it is up to me to actually do it. I haven't yet since I have been holding it until the insurance was settled. The piano was badly damaged since water ran on top of the keys and into the case and sat there for a week. Parts of the drywall ceiling came down on top of it too. It has a current value of $0 according to the appraisal, otherwise maybe State Farm would have taken it.

One thing that I learned though that might be helpful to others. The professional clean up crew that came in did not know enough to check about removing the piano from the house before they ran multiple industrial size dehumidifiers on every level of the house. They brought the humidity down very very low trying to get the floor joists to dry out. I was later told this was a big mistake to do with a piano in the house. If the piano DID have any value it would have been ruined by the sudden drop in humidity.

No one played the piano much anymore so I would rather have money at this point than a piano. My teen son wanted a yamaha keyboard in his room to hook up to his computer. With the cost of college we will really need the money more than the piano.

More free advice... (for better or worse )

Since you are not really interested in a piano and just want the maximum benefit from the insurance company options, and, since you don't know much about painos, I'd suggest, (as others have mentioned) to work with a piano technician, agent, broker or dealer. There might be a small fee or commission charged, but it might be worth your while.

If you decide to go for a new/late-model used piano and then sell it on your own, it would be a big gamble. On the other hand, a lot of people like to take risks and gamble for the big pay-offs.

I’m not so sure you would be able to do a highly profitable “quick-flip” in today’s economy and piano market, but you might get lucky.

Best regards,

Rick

I don't think anything the OP does with the piano after it is replaced could affect insurance premiums. In fact, if he takes the cash the insurance company comes out ahead and makes a bigger profit. What the OP does with the piano afterwards is his own business and is in no way unethical.

The point of the insurance company's offer for cash is obviously that they hope the OP will take the cash and the insurance company pays less. If anyone is doing "gaming, I think it's the insurance company.

The insurance company is also goofily generous in offering $17,000 replacement value (list price) for a piano that can be purchased new for $12,000 (street price from a dealer).

That's another reason my premiums continue to rise.

I do not understand what is going on here.

The OP said:



Somehow, this does not make sense.

Why would the insurance company pay almost double to replace the piano than to pay in cash? The payout for a loss should be the same.

Is there any insurance professionals here that can explain this?

You could always switch to a less-generous insurer who might charge less.

The money offered difference is probable the difference between buying the hulk at it's value as a used piano before the flood and the larger amount as the "full" replacement value for the like or same new piano. You can have cash in hand now but no piano or the dealer can have cash while you get a piano.

As far as the dehumidification. It's likely the the clean up crew knew the piano was a total loss and would be replaced. On one hand they could have taken a step towards maybe salvaging a SERIOUSLY damaged piano. On the other hand they could avoid the probability of rot and mold destroying significant value of the home. I think they did right by the OP.

KZ

Good to hear that Rich since I have a policy with them.

I did investigate Heritage at one point but found they were at least twice and perhaps three times as expensive as the separate rider(which supposedly covers virtually every kind of problem that could occur and includes full replacement value catastrophic damage) I was using from a different insurance company. Whether the significant cost difference is justified by knowing they will not give me any problem is hard to evaluate. I think my separate rider for the piano is around $200/year.