Which appraisal would you send in for Insurance purposes?

[SweetJimmy]

Hello,

I have two appraisals for the new E-Ring I gave to my now fiance. The first appraisal was commissioned by the vendor (this was an internet bought diamond and ring) by an "independent" appraiser in NYC. This was a service that was included by the vendor as part of my purchase.

Of course, to verify the stone and to have my own appraisal done I commissioned an appraiser in my hometown and under the scrutiny of my own eye to do an appraisal.

Here's some details about the appraisals. The first appraisal done in NYC gives the ring a replacement value of $11,000. The Appraisal is not very detailed and comprises of a credit card sized "Gem ID Card" that includes Diamond weight, shape, color, clarity, GIA Certificate # and diamond information on the side stones of the pave style setting and picture of the entire ring. No cut information was provided on the "Gem ID Card." It is not signed by anyone.

The second appraisal, commissioned by myself in my hometown, gives the ring a replacement value of $14,500. The Appraisal is more detailed and comprises of a full size document (8.5" x 11" paper document) that includes Diamond weight, shape, measurements, clarity, color, AGA proportions (2A), Depth %, Table %, Girdle Size, GIA Certificate #, copy of GIA Certificate, information on side stones and setting and picture of entire ring. The document is signed by the appraiser.

The dilemma is whether I should submit the appraisal from NYC or the appraisal done in hometown. The ring cost me ~$6,000. I got a good deal as the Appraiser said I paid under "wholesale" as she was checking her Rap Sheet prices. Of course, these prices are not necessarily representative of "wholesale" prices, but let's just say that I could replace this ring at a conservative estimate of $7,000. Now at first thought, the $11,000 appraisal would make more sense because it would lower my annual premium while still covering me on replacement. However, the second appraisal seems much more professional, thorough and complete especially regarding the AGA cut grade. It would increase my annual premium though by $36/year based on Jeweler's Mutual price quote. But it could "potentially" save me from getting screwed in the event I had to make a claim for replacement. I suppose it also factors in potential inflation in diamond prices in the future as well. I am not too worried about this though given the high appraisal values of both vs. actual cost.

So I ask for the opinion of those more experienced than me. What would you do? Do I need to worry about Jeweler's Mutual screwing me on a claim because of a less detailed appraisal? And finally, which appraisal would you send in?

Thanks,

SJ

 

[denverappraiser]

Re: Which appraisal would you send in for Insurance purposes

The purpose of an insurance appraisal is to estimate the cost to replace the item with another of 'like kind and quality' or words to that effect and to provide sufficient documentation to make that replacement if a loss occurs. Ignore the first document as completely inadequate. The description is the most important part come replacement time and it's not there. If you could replace it for $7000, chances are good that your insurance company could as well. Discuss this topic with your appraiser. Overvaluing for insurance is doing you no favors.

 

[SB621]

Re: Which appraisal would you send in for Insurance purposes

First off you need to understand how your insurance works. If you loose the ring most places won't cut you a check. they will do their own online shopping and purchase a new ring for you. SoI don't understand the point of insuring your ring for 14k when you didn't buy it as such. Plus more appraisals are inflated. You should have asked for something more in line with real world costs.

Anyhow with all that being said. USAA let me turn in my appraisal that said replacement value was 10k but let me insure it for what I actually paid for it- which was 6.5k. When I lost my ring they couldn't find anything compairable and ended up giving me a check for 6.5k. Not all insurance companies work this way so you need to find out what exactly you are paying for. Regardless I wouldn't pay for a ring to insure at double what I paid. Waste of money in my honest opinion.

 

[kindred]

Re: Which appraisal would you send in for Insurance purposes

I would submit the second, more detailed appraisal but ask them if you can insure for the amount you paid.

 

[diamondseeker2006]

Re: Which appraisal would you send in for Insurance purposes

Yes, never over insure by double the value! Did you tell the local appraiser what you paid? If not, you need to do that and ask them if they would please adjust the value to reflect what you paid or a little more.

 

[new4diamond]

Re: Which appraisal would you send in for Insurance purposes

I thought I would post this....today, I took a ring set & earring set (purchased from PC venders) to a local Jeweler and the owner did the appraisal. After he examined/measured/weighed/pictured/etc. he used a computer program where he enters all the information and it calculates/prints the appraisal value w/pictures and he signs 2 copies for the customer. Very nice looking detailed professional appraisal report, as well as the owner was very professional, but....

The appraisal was much higher than what I paid for the various pieces by 30%-50%. I asked him why so much difference, and he said it is based on current diamond/gem/silver/gold/metal prices and all specifications entered with current retail maket value that is updated weekly. So, I don't know but maybe that is correct based on retail store prices vs online internet prices.

I plan to go with Jewelers Mutual/Perfect Circle....they want either a sales receipt or appraisal for jewelry, however anything with a value over $5000 they require a appraisal. As the ring set cost was over that and just purchased I will see if they accept my invoice....and go from there. I don't want to pay the insurance cost for a much higher value that it would cost to replace.

 

[John P]

Re: Which appraisal would you send in for Insurance purposes

The purpose of an insurance appraisal is to estimate the cost to replace the item with another of 'like kind and quality' or words to that effect and to provide sufficient documentation to make that replacement if a loss occurs. Ignore the first document as completely inadequate. The description is the most important part come replacement time and it's not there. If you could replace it for $7000, chances are good that your insurance company could as well. Discuss this topic with your appraiser. Overvaluing for insurance is doing you no favors.

The best insurance appraisal will provide enough details that everyone - consumer, insurance company and future jeweler/gemologists - can easily agree on what's "comparable" if replacement is needed. The value should be logical, without over-inflation.

Quoting some appraisal wisdom: Valuation is not a constant. How someone figures value can only be a snapshot of how much a given piece commands in a given market at a given time. If you buy a 2ct diamond solitaire from Blue Nile you're likely to pay a different price than your cousin would for the identical diamond and setting at a casino jewelry store in Dubai. So what happens when you and your cousin both go to the same appraiser?

I believe that appraiser's "replacement value" should lie somewhere between the cost of blind, no-frills internet and a showroom where the cappuccino machine costs more than my car. But what will the cousins think? Will they see that value as over-inflating for the BN guy and shockingly under-valuing for the Dubai guy...who may already have a hangover and some regrets to begin with?

For fun I'd like to ask Neil - how would you proceed in the above hypothetical?

To the OP: If you can replace the item for $7,000 perhaps explain that logic to your appraiser. He may have been giving you an unnecessary cushion? Or maybe he just returned from a trip to Dubai (haha).

 

[heididdl]

Re: Which appraisal would you send in for Insurance purposes

I have a question for Neil

You know about my EGL 2.41 studs

I got an appraisal that came with the earrings for $14,500 (his asking price before my 3,000 haha discount)

I am appraising these earrings as F & G color Si1 quality (which is GIA Certified would be like $20,000 to replace)

Plus we decided that my earrings are truly H-I s12/I quality

So do I go with the independant appraisers quote of $9,500 and pay less each year or keep the higher $14,500 so g d forbid they get stolen or lost I get an upgraded pair of studs.

and I have lost one stud already in my life time lol

Hope this also helps John (remember the higher you appraise the higher your premium mine went up $100 for the rider when I upgraded my stones )

 

[denverappraiser]

Re: Which appraisal would you send in for Insurance purposes

Appraising is far less of a psychic power than people tend to assume. The usual insurance objective is to define what it is with sufficient detail that it can be replaced in the case of a loss and to provide appropriate funding to do that if needed. The purpose of an insurance appraisal is to support that objective. (Note: There are other types of appraisals that have completely different objectives and definitions of value).

Often there are issues that revolve around what it is, which are gemological questions, but the ones postulated here are all about the market. A particular item can trade for substantially different prices depending on where and how it’s sold. We all know that, and it’s definitely not limited to diamonds. So what is the ‘value’? There are lots of choices but in this case we’re talking about insurance and that points to the definition in your contract. They aren’t all the same but they generally are interested in the ‘usual and customary market’ for the thing in question and they’re usually talking about replacement with something of ‘like kind and quality’ in the case of a loss. The quality part is the description, photographs and all of the gemological data but that doesn’t touch on the market. In the case of most jewelry, that generally means a local retail specialty jewelry store. It’s probably not the most expensive store in town but it’s not the guy at the flea market either. This will depend in part on the item. Certain items are ONLY available at certain stores for example. New Rolex watches come to mind. They are only available at Rolex authorized dealers and these tend to be well established specialty jewelry stores. Others are ONLY available at the low end stores, Clarity enhanced diamonds in silver mountings comes to mind. The sellers here vary a lot and they tend to point at ‘similar’ things at high end stores that are significantly more expensive and suggest those for comparison prices. Indeed they are, but so what? Replacement value means the expected cost that an appropriate store would reasonably be expected to actually charge net of their usual discounts but without the need to wait for ‘special’ sales. That is to say, the price they actually could reasonably expect to get for the replacement. This may or may not be the same as the price printed on the tag.

Chances are good that shoppers around here aren’t buying in the above described marketplace, and that leads to some significant confusion. What you paid is not necessarily the value by the above definition. To make matters worse, your insurance company probably isn’t going to buying the replacement in that marketplace either but they’re not going to tell you because they have a vested interest in high values. An item that they can replace for $5000 that has a declared value of $15000 has $10,000 worth of coverage and premiums where they have no risk whatever. That’s about as easy money as exists in the world. Of course they’re happy with it. Would you be? Jewelers make it even worse. They want to use the above definition as a way of identifying their own market as a bargain. It may be true, but an insurance appraisal is not particularly good evidence of it even if it’s done correctly.

Heidi, the key to your question is first in defining what you have. EGL/F/SI1 does not mean the same as GIA/F/SI1. The insurance companies are well aware of this. If you have a loss and they replace, they’ll replace with EGL goods that meet your appraiser’s minimum specs. That’s why they’re requiring you to give them an appraisal up front. As long as they can do it for below the declared value, it’s a done deal. It doesn’t matter if they can do it for a lot or a little below, they’ll pay whatever they must and not a penny more. Make no mistake, the companies have some very savvy shoppers on staff and there’s nothing we’re talking about here that they aren’t well aware of.

 

[heididdl]

Re: Which appraisal would you send in for Insurance purposes

wow I have been waiting for your response. Thank you for formulating such a great response about appraisal and replacement insurance et al.

I think this will be very helpful for all ps ers....


As for my insurance company I am happy to say Plymouth rock in NJ actually gives us the choice of their doing the replacement or a check for the full amount. 15 years ago someone ripped my 1.00 pear shape necklace right off my neck. The insurance company offered to replace the necklace at the full apparaisal price $8,000 and I said I preferred my own jeweler. so they sent the check directly to the jeweler who replaced is with a much bigger (1.and nicer stone.

Also, the appraisal sent to this insurance companny with my studs is the one that came with the earrings F/G si1 that was written by their in house GIA graduate (as their inhouse appraiser). I had also gotten that indepedent appraisal ( H/I S12/II) and I did not submit that one. That was for my peace of mind.

Hopefully I will never know because I never want to loose these studs I love them.