Question

Upon graduating from college, your parents host a graduation party in celebration for you at their house.

50 of your friends attend along with several family members and neighbors. At the end of the party everyone is departing the house. As the last guests filter out the front door, you thank them for attending and close the door.

3 minutes later you hear a loud knock on the front door. You open the door and see that one of your trusted friends is standing there and is very upset. She tells you that after getting into her car she realized her $9,000 Rolex watch was missing. Immediately, you, your friend and your family members conduct a search of the house, front yard and your friend's pocketbook, coat pockets and vehicle to no avail - the watch cannot be located.

Questions:

1) Should you call the police?

2) Is this apparent loss covered by the parents' home owner's insurance?

3) If not, what insurance might cover this loss?

4) What should happen if your friend receives a replacement watch via an insurance claim then, 3 months later, your mother calls you to say she discovered the lost watch on the ground while pruning a front lawn plant?

Answer 1

Lets answer them one by one

1) Should you call the police?

Ans- Yes, in case of loss of any valuable item you should call police and report the loss. This is important as it gives you a proof or a documentation of your loss, this document can be used later when you are reporting you loss to any other authorities. In case of Rolex watch, it keeps a track of all watches manufactured and sold; genuine buyers will always register their watch on Rolex website. This police document can be used to inform Rolex Company about your loss and if someone is registering the watch again thinking it is a genuine buy the company database will be alerted and you will get all the information needed to contact the person.

2) Is this apparent loss covered by the parents' home owner's insurance?

Ans- No, generally home owners insurance will cover damage or loss of items due to theft or fire in our case the watch was lost so it will not be covered. Damage or loss of personal items are only covered to certain extend up to a maximum limit defined by your policy.

3) If not, what insurance might cover this loss?

Ans- A personal property coverage will cover this type of loss, in our case if your friend has a personal property coverage then she can claim for the loss, however your parents cannot claim even if they have personal property coverage as it will only cover property which is owned by your parents.

4) What should happen if your friend receives a replacement watch via an insurance claim then, 3 months later, your mother calls you to say she discovered the lost watch on the ground while pruning a front lawn plant?

Ans- If you manage to find the watch after getting a replacement watch from insurance company, first thing you need to do is inform your friend about it.

She should inform the insurance company that she has found the watch otherwise she could be liable fraud or potential imprisonment. She will need to speak to insurance company about what options she has. Generally there are 2 options, either return the new watch or return the money which was received. If you return the watch the insurance company will auction it and recover the amount. If you want to keep the new watch you will have to return the money you received as competition. Also in this case she will need to inform Rolex Company about finding her watch so as they can deactivate the theft alert.