Appraiser’s Chronicles, February 2020
I just relived a very common scenario when I appraised a client’s diamond ring for $6000 less than a previous appraiser had in 2008. While the last appraisal was for $19,000, I felt $13,000 was plenty to replace it in the retail marketplace as well back in 2008, since values had not changed much. So why was the first appraiser so high? Why, indeed. Unless you have an agreed upon value that pays out the scheduled amount (in which case you may not even need an appraisal), an insurance company only owes what you lost. But the appraisal figure establishes the premium you pay and if the appraisal is $6000 too high, you just paid about $72 more on your yearly premium. You see where I am going with this – twelve years means $864 you never needed to pay.
Some insurers also have a yearly inflation adjustment that raises premiums automatically, even if values don’t go up! If an insurer does a payout for coverage, it only needs to be what is costs in the marketplace (or their negotiated deal). Generally, your jewelry is just replaced, and you never know what the actual cost was.
So, what had my client actually paid the jeweler for the ring before that 2008 appraisal? A bit less than my appraisal.
Stay, safe, stay informed.