What is a jewelry appraisal?
An appraisal of fine jewelry is the qualified opinion of an expert in the field of gemology pertaining to the value of the article described. It first requires an accurate representation of the item and its components – the gemstones and mountings – their identification and qualitative grading against industry standards. It then requires the application of relative value for the intended purpose.
Are there different types of appraisals?
Yes. While the physical description of an article remains the same, the relative value is dependent upon the purpose of the appraisal.
For insurance purposes, a relative retail replacement value is typical. Since retail values vary from source to source, you may see discrepancies between appraisers depending upon their interpretation of the market.
How insurance works
Your insurance policy (or agent) will explain your coverage limits and conditions pertaining to jewelry. To your homeowners or renters policy you need to add scheduled property insurance for individually listed items outside of the generic coverage. Art, antiques, furs and jewelry are typical items so listed because they are of significant individual value and/or need detailed descriptions. The premium you pay is based upon the dollar amount listed, usually from an appraisal.
The insurance company’s obligation is to replace a lost item with one of equal quality – spending what it takes, up to the amount scheduled for that item. Because insurance companies obtain discounts from their replacement sources, they end up paying out less than the typical retail replacement figure states. If you opt for a cash settlement, it will usually be at this lower amount. More and more insurance companies are asking appraisers to be conservative in their values which can reduce insurance premiums.
What should I have appraised?
Your insurance policy will state a coverage for unscheduled specialty items such as furs and jewelry. Generally, items worth less than $500 do not require the detailed description of an appraisal and the costs become prohibitive.
If the value of an individual item is $1000 or more, it usually deserves an appraisal and is separately scheduled on your policy. Extra coverage is then purchased and the item is fully covered (usually without a deductible) for replacement with like quality. This is were the real strength of the independent appraisal comes in. With a qualified appraisal, the insurance company has specific requirements for replacement and you have a document to make sure that happens.
Can’t I use my sales receipt?
Generally, a scheduled item will require a description beyond the scope of a normal sales receipt. By scheduling an item solely on what was paid, you may also become underinsured for like replacement in the future.
If the purpose of the appraisal is for an estate settlement a fair market value is required. This type of value is substantially less than retail and is a requirement by courts and the Internal Revenue Service for legal purposes. This value would also be appropriate for other legal or tax purposes such as dissolution settlement, charitable contributions and for some criminal proceedings.
Any other reasons for an appraisal?
Knowing whether you received the quality bargained for is usually sufficient motivation. With all of the claims made in the jewelry industry it is often difficult to compare similar items. The prevalence of pre-certified diamonds in the marketplace has also created disreputable grading “laboratories” , making verification of certificate information important. By having a detailed description and inclusion diagrams, you can have the identity of your diamonds confirmed if ever called into question. Even if you don’t insure an item, crime statistics show the likelihood of theft to be a real concern. An IRS loss claim would need substantiation by an appraisal document.
When jewelry is custom designed, handmade or from a particular manufacturer, its relative value may be substantially different from that of production pieces. Just like certain artists command higher rates for their work, so do established jewelry designers and it is important to identify such work in the appraisal for proper replacement.
Antique jewelry or period pieces no longer in production require research of like items and their availability on the secondary market. An appraisal for current reproduction can also be prepared, reflecting what a jeweler might charge to faithfully reproduce a like item by modern methods. The appraisal time and charges and resultant insurance premiums will, of course be higher if this method is requested and it would only have a use for an actual replacement ( not resell). In the case of discontinued watches, replacement may be requested based upon comparable new models or the same model from the secondary market. Consult your insurance agent as to which they will allow.
Selling pre-owned jewelry
Transactions outside of the retail environment will depend upon an item’s marketability and the method of sale. An appraisal is beneficial to both parties because it establishes quality and gives a comparative retail value for comparison. Consult your appraiser for further information.
Who should appraise my jewelry?
Unfortunately, there are no local or federal regulations prohibiting the unqualified from appraising jewelry as of the writing of this brochure. This means you need to check the credentials of your appraiser before contracting them. The Graduate Gemologist (G.G.) degree indicates a basic level of study in the identification of gems and diamond grading. Memberships in trade associations show involvement in the industry.
Most important, though is their reputation within the industry. Since most jewelers contract appraisal services, ask several whom they use or would recommend as fair and competent. Those jewelers who perform appraisals in-house should have a department dedicated to that function with all of the facilities and expertise of an independent laboratory.
Experience as in any field, is of paramount importance. Ask how long they have been appraising and in what capacities. See that they utilize proper laboratory equipment for the job and in fact that they have a dedicated laboratory. Many appraisers set up at in-store events. Portable laboratory equipment should mirror what’s back at the lab – and that means there ought to be a lab and established place of business you can contact in the future.
What should I pay for an appraisal?
A professional service by an independent dedicated laboratory justifies a fair price, just as would the work of a skilled attorney or accountant. For documentation that thoroughly represents the article described, expect to pay about $80 to $90 an item, with possible multiple piece discounts or hourly rates applicable. Complex items, larger stones or antique pieces can take more time and thereby cost more to appraise. Never pay an appraiser based upon a percentage of the appraised value. Once an appraisal has been performed, future updating by the same company should be easy and at a discounted rate (another good reason to deal with an well established appraiser). However, if an article has changed – such as a new setting, added stones, etc. it requires a new appraisal.
Even if the value hasn’t changed, a current review is always advisable on a periodic basis. When you change insurance companies, they will usually require an document bearing the current date.
How is an appraised value derived?
Contemporary jewelry usually has like items readily available which allow for a market approach to the appraisal process. Not unlike methods of the real estate appraiser, comparables are used to establish a replacement value. In a cost approach, components of the item are and added together to establish value. Diamonds are valued using specific price lists once accurately graded. Colored stones, on the other hand require extended experience in the field with industry sources for each specific gem and their quality. The appraisal usually encompasses the whole item rather than each component listed separately. An evaluation of the latter would result in a higher cumulative value and raise insurance premiums needlessly.