Guns, Ammo Overvalued By Insurance Policyholders, New Study Claims

Guns and ammunition are consistently overvalued by insurance policyholders, according to a new study from Enservio, Inc., a contents claims processing software provider. The amount these specialty items are overvalued in insurance claims can range from more than 50 percent (guns) to 126 percent (ammo). The company’s data also found that around 10 percent of the $2 billion in claims it processes annually contain guns, ammunition, and firearm accessories.

Claims Journal reports that “the estimated rate of private gun ownership (both licit and illicit) in America is 101.05 firearms per 100 people, making the U.S. the highest per capita in the world for the possession of firearms.”

“The chances of a field adjuster or claims inventory professional finding a gun while on the job are extraordinarily high,” said Enservio Senior Contents Consultant Chad Horlbogen. “Americans love their guns, but valuing them can be difficult. Being a specialty item, firearms have unique characteristics that claim pros need to know about in order to fairly reimburse or replace these items correctly.”

Most gun owners feel that their purchases appreciate in value over time. This is partly due to the long-lasting materials from which guns are manufactured, CJ notes, but it doesn’t stop there.

“Many people believe that all guns appreciate in value. They are often passed down between generations, and considered a member of the family,” Horlbogen added.

Also boosting perceived values are the state and federal restrictions placed on purchasing guns. This turns them into something akin to a collectible rather than a tool or weapon, at least in the minds of owners. Actual cash value, however, is another story entirely. CJ had a full breakdown of what policyholder perceptions are versus actual cash value. These include the following:

  • Handguns: Average policyholder claims $285; actual cash value is $186
  • Rifles: Average policyholder claims $291; actual cash value is $186
  • Rifle Ammunition: Average policyholder claims $104; actual cash value is $46
  • Rifle Magazines: Average policyholder claims $36; actual cash value is $10
  • Shotgun scopes: Average policyholder claims $62; actual cash value is $31


What should an insurance agent take from this?

Primarily, it may be a good idea for you to meet with your clients when reviewing their list of interior contents for the policy they are about to purchase. Inform them of the research and the added attention that claims processing agents are watching out for when it comes to assigning value on firearms, ammunition, and firearm accessories.

It’s possible that a client will disagree with the value of their arms, but it’s better that they have a clear indication of what actual cash value is now rather than when they try to collect (assuming they ever have to file a claim).

Numerous companies can provide help with appraisal. Many will prefer to have the appraisal done locally by someone they trust. There are also online options. Fees for this service can vary but usually fall in the $50 range per gun. Ammunition and accessories are a bit trickier, but that’s why it is important to contact the appraiser with any questions prior to initiating the review.

Finally, it’s worth mentioning that an appraisal can help your client protect the actual value of his inventory, so he or she isn’t undervalued.


In Summary

What a client believes their possessions to be worth — firearms or otherwise — and what they’re actually worth can be quite different. In the case of guns and ammo, there is a heavy markup between perception and value. But as an agent, you can help customers establish more realistic expectations when signing them up for a policy or updating coverage limits by sharing data and guiding them through the process. Read more on this report from Claims Journal.


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