A Gem Guide for Getting a Jewelry Appraisal
You need insurance to protect your belongings. To cover jewelry appropriately through insurance though, you must know its value. That does not refer to the amount you paid for it. Like homes, vehicles, and stock, jewelry raises or lowers in value over time. You might find it invaluable, but the insurance company needs an actual math figure to set the value by. This requires in-person observation of an item and in an unencumbered state.
Your piece of jewelry requires an official appraisal from a certified professional who scrutinizes the piece and assigns a monetary value to it. Each piece of jewelry receives its own valuation. The appraiser documents the value and describes the jewelry’s attributes. The certification comes from an educational body from which the appraiser takes courses and passes an exam that tests their complete knowledge of the topic as well as their ability to complete the work in a reasonable amount of time.
Types of Appraisals
While the most common reason to appraise a piece of jewelry or the pieces in a jewelry collection is insuring it, you may also need such an appraisal before selling the item or paying taxes on it. These appraisal types all result in the same finding — the fair market value of the jewelry. The typical appraisal types include those for:
Charitable donations
Estate inclusions
Fair market value appraisals for financial planning
Insurance appraisals to assign retail replacement value
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The Appraisal Process
The appraisal process varies depending on whether you have the piece undergo an online or in-person appraisal. If you choose an online appraisal, you begin by submitting images to the appraiser. These should be high resolution and show the jewelry from all angles. It should also include a number of detailed photos of the piece (or pieces, if you need an appraisal of more than one item). This lets the appraiser see the item as if it were there and determine any repair needs.
An in-person appraisal requires you to bring the item to the appraiser. Most major cities include numerous options for jewelry appraisal. The appraisal process includes:
A process matching the appraisal’s purpose
An understandable and clear measurement and grading process explanation
A definitive value statement authorized, signed, and sealed by the appraiser
An explanation of the appraisal’s purpose on the appraisal certificate
A discussion offer with the appraiser for questions or clarifications
A jewelry appraisal involving a piece of jewelry with gemstones must include the four Cs of the gems. This refers to the carat, cut, color and clarity, and must accompany any diamonds, especially. Appraisers work for themselves. They conduct appraisals for pay only and are independent contractors. This means you only have a right to the finished product, not watching them do the work.
Insurance Valuation: The Most Common Appraisal
Let us face it. If you have a piece of jewelry so valuable as to require its own inclusion in an insurance policy or to warrant its own insurance policy, you probably cannot actually “replace” it. These bespoke pieces are one-of-a-kind. The appraisal simply provides an opportunity for you to determine the amount of money it would require to recreate as close as possible to the original item.
If your great-grandmother’s parents had a broach crafted for her of mother-of-pearl and rubies set in gold, the era in which it was crafted comprises a significant part of the value. The jewelry maker would no longer be living. While another piece of jewelry might capably copy the look of the piece, that artisan could not copy the age of the piece or the exact materials used. The materials used to create the original may not exist any longer. While you could have a copy made, it would only look like the original. It would not carry the same value as a collectible. Neither would it carry the same sentimental value.
For this reason, an insurance appraisal can never include the actual total value of a jewelry piece. You will receive one of three types of valuation. It will either provide a retail replacement value, an agreed-upon value, or actual cash value. The retail replacement value lets you know what it costs to purchase the same jewelry design as a new piece. The agreed-upon value provides the full cost of replacing the item with one of its exact designs. You could have a new piece designed that looks the same and uses the same types and quality of gems. This requires you to adjust the policy every two years or so to keep the amount the current retail market value. The actual cash value refers to an equation applied to the replacement cost. It subtracts depreciation and obsolescence from the actual cash value. The agreed-upon value policies cost less, but you will not receive enough money to replace the piece completely.
Price Variations
There’s also variation within the replacement value calculations. A modern piece receives an appraisal using a new replacement value (NRV), while that piece made for your great-grandmother in our example, receives an appraisal of a second-hand replacement value (SHRV).
Your appraisal does not describe the actual worth of the item. If you actioned the broach described in the example (God forbid), with an asking price of the appraised value, you would likely obtain a much higher price than the sales price. Buyer willingness and their personal appraisal of the intrinsic value also matter.
Another reason you may get a different price is that if you auction it, is that you need to also submit the piece for a grading report. The auctioneer, auction specialist, or jewelry dealer will set the final resale market value to determine the opening or asking price.
Who Appraises Jewelry
Many organizations certify appraisers. In the US, the Gemological Institute of America does this. In the UK, the Gemological Association of Great Britain, The Gemological Institute of America, and the National Association of Goldsmiths do this. All these organizations offer a database of appraisers on their websites.
Check the individual’s certification. Ensure that they kept it current. Read reviews of their work online at sites like Angie’s List.
What Does it Cost to Appraise Jewelry?
Much variation exists in the cost of jewelry appraisals. It depends on the appraiser, their location, and the reason for the appraisal. Some appraisers charge a flat fee, some charge an hourly rate, some charge a percentage of the appraised item’s final value. These hourly rates range from $50 to $150 per hour. The auctioneer’s specialist provides a free valuation. Technically, the cost gets rolled into the commission the auction site earns on the sale. Online appraisals cost less than in-person appraisals, but the online method does not allow the appraiser to actually touch the item or examine its condition physically. This results in less than appropriate appraisals.
Who Does Not Provide Appraisals?
The GIA offers educational courses and conducts research. It does not offer appraisals. It does provide lab reports that determine the gemstone’s quality. The educational institutions in the UK that certify appraisers also do not conduct appraisals. You can find a trained appraiser at appraisal companies who have passed their certifying exams by using the organization’s online database.
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