Customers usually have numerous questions when it comes time to appraise jewelry for insurance against loss, theft or damage. As both a Graduate and Certified Gemologist in the business of appraising customer’s jewelry over a twenty-five year period I will outline some of the more important issues that need to be addressed. When we refer to scheduled insurance, it will pertain to a complete description and replacement cost appraisal completed by an experienced retail jeweler and/or Gemologist with the culmination of an insurance binder.
To appraise or not to appraise
The most important factor when considering an appraisal is whether it is cost effective to have the item appraised and subsequently insured. Probably the best argument for scheduled insurance is peace of mind. This non-financial aspect may supersede everything else involved. Just as we automatically insure our homes and cars without much discussion, with jewelry, usually a conscious decision is necessary. For example, consider the loss of $10,000. on a Cartier watch. If the individual does not sustain more than a minor impact on his or hers financial portfolio, then possibly both the time, expense and annual insurance premiums may not be justified. On the other hand, if the watch was a considerable investment for the person and constitutes a good portionof their jewelry inventory, then by all means an appraisal and insurance coverage would be highly recommended. Collections of jewelry may vary from several hundred dollars to hundreds of thousands of dollars and in many instances even large collections remain uninsured. Jewelry that is stored in safety deposit boxes and is not in daily use are frequently uninsured pieces. Geographic areas that have higher degrees of risk from theft present another argument for the implementation of insurance. In addition, those who travel frequently or tend to remove their jewelry without storing it in a home or hotel safe would probably be better served by a complete appraisal and coverage. Substantial home safes provide excellent protection against potential loss if used regularly. Clients who tend to wear their jewelry while engaged in sports, gardening, dishes etc. may well decide on full coverage considering the possible damage to the jewelry or gems. Insurance compensation includes the repair of settings or replacement of a diamond or other gemstone. Jewelry is usually associated with special occasions and its sentimental value may far exceed its actual monetary value. As a guideline, items that are either costume jewelry or valued less than $500 may neither justify the costs of appraisal nor the subsequent insurance premiums and deductables. Exceptions to this premise would be rare collectible costume jewelry or a collection of jewelry exceeding $25,000 where the majority of pieces are valued under $500. Most insurance carriers will have blanket coverage for jewelry and art anywhere between $10,000 and$25,000. If the total amount of jewelry owned falls in that price category, then original receipts and/or photos may be sufficient documentation for any potential loss. It is imperative to consult with your insurance agent for a clear understanding of all the carriers requirements.
What are the costs of appraisals and insurance coverage?
Theinsurance appraisal will normally be charged on an hourly basis. In the past, some appraisers charged a small percentage of the entire jewelry collection, yet this fee schedule is for the most part no longer utilized. Depending on the expertise of the appraiser and experience, which will also be coupled with the educational and gemological background achieved, a range might be anywhere from $75.00per hour to $200.00 or more per hour. Certified appraisers and Gemologists will generally charge a higher hourly rate than an experienced retail jeweler. Many jewelers provide free appraisals on items sold from their store. Estate appraisals and complex gem identifications can easily exceed $2,000. or more depending on the number of jewelry items. Updates and reappraisal of items usually are less costly then a new appraisal especially if previous documentation is accurate and not too dated. The amount of time involved for theappraiser will normally be less on this type of appraisal. Generally, scheduled insurance premiums for jewelry items range from $15.00 to$25.00 per thousand dollars of insured value per year. As an example: A one carat diamond ring with an insured replacement value of $5,000 would have a premium of approximately $75.00 to $125.00 per year in addition to the yearly policy premium for either home owners or renters coverage.
When is insurance coverage binding?
Customers sometimes ask me if a previously written jewelry appraisal which was not sent to an insurance agent for scheduling on their policy would suffice if there was a loss. In my experience, clients have not been able to recuperate a loss with an appraisal that was not sent and executed by the insurance carrier. The best possibility would be partial compensation based on the blanket coverage of the policy. In addition, once an item has been lost or stolen, there is not a reliable method to determine the value of jewelry just before the loss. The jewelry may have sustained damage prior to loss. This is also why insurance companies ask for periodic updates on appraisals. It is not just value that can change but condition as well. In one experience which was related to me, a customer had a complete appraisal of her diamond ring,yet it was not scheduled with the insurance carrier. With a subsequent loss the client was only compensated for the minimum blanket coverage and the final loss was over $20,000.
Taking your Jewelry in for appraisal
Most appraisals are done on an appointment basis. This is beneficial to both the client and jeweler/Gemologist. Security, scheduling and preparation is of paramount importance. The customer should expect a few basic preconditions. The Jewelry store should encompass a secure area to review the items to be appraised. The jeweler should carry a Jewelers Block policy to insure the customer items while the jewelry is in their possession. Ideally a fully equipped gem lab should be on the premises to allow for diamond grading and Gem identification. The process of an appraisal should start with a complete inventory of all the items to be appraised including the condition of settings and Gemstones. Chips and nicks on diamonds should be noted including areas of settings that are obscured from prongs or bezels. Any related certifications such as an American Gem Society or Gemological Institute of America report should be listed on the insurance appraisal along with the document number. The appraiser may also suggest necessaryrepairs on the jewelry and the customer may decide to have the repairs accomplished concurrently with the appraisal. Finally, the jeweler should give a detailed receipt with an estimated total value of items to be insured.
Valuation
This is one of the most difficult aspects of appraising. An insurance appraisal should allow a customer to replace their lost item with a similar piece of equal value. This means that the replacement value should not be so low that the customer has to search four states for a similar item nor should the valuation be so high that insurance premiums paid are not reflective as to the actual value of the item. Neither should the customer be required to purchase their jewelry at auction or through a wholesaler should a loss occur. If an original purchase invoice for jewelry, even if relatively current is abnormally low or high, the appraiser should reevaluate the item to reflect true market conditions. In a recent appraisal, without documents supplied,I was able to ascertain the price paid for an item. The amount paid by the customer was reflective of wholesale prices which in the wider market did not constitute an average replacement value. Hence elevated the price to include an average markup with todays market conditions. In contrast, some jewelry sold is accompanied by an appraisal from the selling jeweler reflecting valuations which may be twice what the customer paid. This is usually a marketing technique that is an attempt to convince the customer that they purchased an item for much less then it is actually worth. Revisions of these types of appraisals are frequent and better serve the customer in case of a future loss.
Claims
Once a loss has occurred and a claim has been submitted to an insurance company a few words of caution may be fitting. If a customer originally owned a 2.00ct., F color, VS1 diamond with a triple “0” ideal cut designation, then that customer should be able to replace that stone with a diamond that has exactly the same designations or better. Cost savings may be achieved by the carrier over the initial appraised diamond if the replacement diamond is a 2.00ct diamond of F color and VS1 clarity but happens to be fluorescent or not cut to ideal proportions. These are subtle deviations from the original but not always apparent to the layman. Consequently a consultation with a gemologist prior to settlement may be beneficial. Customers may also request from their insurance company full reimbursement for the appraised value of the diamond and then proceed to shop from that standpoint. This will help guarantee a fair replacement.
Professional Organizations and Education
For jewelry appraisals, membership in the American Gem Society, American Gem Trade Association and American Society of Appraisers provide a good starting point when choosing an appraiser. These organizations stress principles, ethics and full disclosure in all aspects of appraising. A certified or Graduate Gemologist will have the educational background required to identify Gems and grade diamonds. An experienced jeweler/appraiser will be able to research valuations on Gold, watches,rings and related jewelry items.
Jeff Deleuse
GraduateGemologist, Certified Gemologist, B.A. Psychology-California State University San Francisco, Member American Gem Society & AmericanGem Trade Association
to contact Jeff Deleuse call 415-435-2484 or email deleuse@deleusejewelers.com
Deleuse Jewelers
1771 Tiburon Blvd.
Tiburon, CA 94920
