The insurance company is not to blame for this screw up.

Which is better?

Insurance Company Valuation Year on Year

Vs

Jewellery Appraisal

I have just been presented with three pieces of jewelry from a customer who is looking for an appraisal. The customer was asked to obtain an appraisal by the insurance company as it had not been done for 15 years for two pieces and never on one.

Insurance company statement

On the customers policy documents the insurance company had typed a single line statement of description followed by the value. They read as follows:

1. Gents 14k Y/G ring with 1 diamond $3,600

2. 14ct y/g Ladies 6mm tapered and raised cluster diamond ring $4,400

3. Ladies 14-18k y/g ring with 7 diamonds $3,700

Regardless of the grammatical errors (how many Lady’s?) the descriptions are bad and in all cases lacking information.

What should be in a jewelry appraisal?

In general, jewelry appraisals are done on each piece and will include the following:

A full description of the piece

Measurements of the piece as a whole and the individual parts i.e. stones

All stones: quality and weight

Condition statement

Item weight

Photograph

When a piece is assessed as being worth less than say $500-$600 then a single line description may suffice but the process of measuring and accounting for the value has still to be completed.

Once all these have been done then attributing value to the information is done using up-to-date price lists and guides. These guides are created by the industry to support both the appraiser and the industry buyer.

If a piece has a special provenance (e.g. original owner)  or is old (e.g. circa 1800) some additional research my be needed.

Arriving at a cost price gives a base figure to start with. Depending on the manufacturer and retailer, the cost to retail mark up can be very different. That is another discussion.

Returning to the original set of three pieces, the description and measurements were done, photographs taken, values attributed and mark-ups applied, the result:

1.  A man’s diamond set ring consisting of a wide yellow metal band with deco styled shoulders to a square white metal plate. Centrally set is a modern brilliant cut diamond which is flanked either side by three eight cut diamonds in pip claw settings

$2400

2.  A diamond cluster ring consisting of a  claw set central modern brilliant cut diamond flanked on either side by three, claw set eight cut white sapphires, all in white metal. All to a yellow metal double band.

$2250

3.  A diamond set cluster ring consisting of  thirteen modern brilliant cut diamonds in two layers surrounding a central diamond all set in white metal claw mounts, to a wide shoulder and shank in yellow metal

$1500

The most striking thing about the appraisal is that the values are about half the values given by the insurance company.

So the customer is now paying more for the premium than they need to have been.

Did the insurance company do any thing wrong?

No they did not.

The customer signed a document that stated that they would maintain their jewellery and keep the insurance company informed if any changes in value and condition occur.

They applied increments that had been approved by their assessors as being reasonable on a year-on-year basis.

They take no account of the following variables:

• raw material cost gold, platinum, diamonds

• new technologies synthetic diamonds

• Industry changes    gold finishing, micro diamond setting

• The vagaries of market and fashion

A good appraiser is up-to-date with all the above variables and others besides ensuring that the value is accurate for the purpose given

I did check with a retailer to check my appraised values and it was agree that the customer would easily replace similar jewellery at the lower assessed price.

Appraisals done by a gemologist trained in appraisal techniques by a recognized jewellery organization will become the norm as insurance companies see that it protects their customers and themselves.