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Learn: Diamonds > Appraisals
Introduction
Jewellery Appraisal Cost
What is an Appraisal or Valuation?
Appraisals For Insurance
Expertise
Replacement & Insurance Companies
Appraisals Vs Diamond Grading Reports
Appraisals Myths & Facts
1. Why do I need an appraisal?
You don’t unless you want to insure your ring. But, it can help identify your ring to the police if it is stolen
2. I have a certificate for my diamond, why do I need an appraisal?
There are no values on a grading report and the setting is not included
An example of an Appraisals
Read on for all the answers
What is a jewellery Appraisal or Valuation?
A grading report never has a monetary value listed. However, an appraisal or valuation does. It is usually a document with prices and accurately describes the piece of jewelley, preferably with a photograph. Assessment must include dimensions and carat weights of gems as well as their weight and precious metal karat quality. All the factors are important to establishing the value of the piece. Relevant diamond or gemstone ‘certs’ or grading reports should be listed if relevant. Any grading reports should be mentioned on the appraisal along with the unique identification number.
The level of information should be sufficient to identify that piece in a court of law.
In USA the term Appraisal is common. In ex British Commonwealth countries Valuation is commonly used. The meanings are the same.
There are different types of values for different purposes but the most common is for insurance coverage.
Always use a professional jewellery appraiser!
Appraisals for insurance
Most appraisals are for insurance to establish the quality or a piece for replacement purposes in the event of a loss. Some insurance companies will also offer an agreed value policy, although these are rare and often the company will want to insure more than just your jewellery or may only consider long term trustworthy and usually wealthy clients.
Appraisals and valuations are widely misused as sales tools with inflated prices. Prerendered appraisals can be accurate and useful, however, if a salesperson suggests you are getting a bargain based on some price inflated document then you may find the document is worthless and the goods not accurately described. Running away is a good thing to do!
The benefit of a prerendered appraisal created at the point of manufacture has the advantage that all the components and gems have been individually weighed and graded prior to final setting. Sending a finished piece of jewellery to be appraised after the event may be less accurate even if the appraiser is a top expert because the carat weights may need to be estimated, inclusions may be under claws and grading colour is less accurate.
Expertise
There are professional and not-so-professional appraisers. There are no government laws or protection in most countries or states that mandate professional standards or minimum education or equipment. Appraisers who cover art, furniture, handbags, and all sorts of things and put up a jewellery appraiser shingle, are rarely across and up to date with all those markets. Run away!
Real professional independent appraisers must be expert gemmologists, know how to check gold qualities, and have lots of gem tools and equipment. They also need to be well connected to markets and currently informed about prices. They should not be biased by being traders and downgrading assessments of competitors’ goods.
Appraisers perform different types of valuations. For example estate tax, auction reserve, divorce, fair market value as an intermediary between private buyers and sellers, family and divorce distribution values, and so on. Professional appraisers follow umbrella organisations guidelines for many different purposes. Some appraisers have expertise in representing parties in courts.
Some appraisers will work with you while you wait. Some may even be happy to discuss, show under magnification and explain attributes of your piece. Others will not and work for retailers preferring to keep their location a secret for security reasons. Some online vendors advise that you insist on being present so that your jewels will not be swapped although if the appraiser is properly accredited they will not risk their livelihood and reputation by stealing. Any vendor who suggests you do not trust a well-credentialed appraiser is a vendor to avoid.
There are few laws in any country that ensure appraisers are competent. There are however many different associations around the world that expert professional appraisers can be members of. For jewellery, make sure you choose one that is jewel-focused. The better associations ensure their members are up to date with education and the latest fake gems and identification with accreditation points based on relevant learning as accountants and other professional associations do.
Replacement and Insurance Companies
Insurance companies often demand you go to a specific jeweler for a replacement, usually one ‘upstairs’ with low overheads and little or no inventory. The jeweller is paid by the insurance company and you are not their client, the insurance company is and can give rise to conflict. There have been cases where a court has ruled that a consumer has the right to a replacement from the same retailer they purchased from. If you bought a ring from Tiffany & Co you should not accept a replacement from Joe Blow Jewellers. Likewise, if you made a purchase online and paid a lower than retail price, the appraisal should represent the market that the piece was purchased in. In that case your premium will also be lower.
An insurance appraisal is often inflated over and above the retail cost or price paid. Around 10% is considered reasonable to ensure that inflation or price rises do not make a fair replacement impossible. Doubling or grossly inflated values are not in your interest as insurance companies also employ jewellery experts and you will simply pay more for no benefit.
Appraisals vs. Diamond Grading Reports
A diamond grading report or certificate is a detailed description of an individual diamond. It does not and should not have a value associated with it as the document is not related to a sale price. Valuable diamonds these days almost always come with a ‘cert’ and better diamonds usually come with a GIA report.
A receipt or point-of-sale document only provides a brief description and the price paid. It is an important document and should be kept in a safe place along with an appraisal and any certificates. If there are any electronic or digital files of certificates then it also makes sense to file these so that they can be easily retrieved at a later time.
Jewellery Appraisal Cost
A competent appraiser makes your life easier if you ever need to make a claim. Shopping around for a cheaper appraiser and saving money upfront may not be a good long-term approach. That same appraiser, or the original seller, should be your first call if you have a loss.
A professional appraiser will charge for services by the hour, a flat fee per piece or may also make a fee based on a percentage of the value of the piece or pieces.
In the USA, the American Gem Society and the National Association of Jewellery Appraisers are respected organisations. In Australia, the National Council of Jewellery Valuers (NCJV) is the best organisation. These organisations require specialised training in jewellery appraising and continuing education to maintain membership.