Appraisal above purchase price, is this normal

I just had my ring appraised at David Atlas. I highly recommend the firm. I had Good Old Gold ship a stone to them and then the local jeweler had to show him the setting. They did their best accommodate me my special situation and they worked pretty fast.

My ring actually appraised for about $3,000 more. This made me wonder about the appraisals in general. Are they usually higher than listed? What if I had purchase my ring at Tiffany rather than at Good Old Gold, would the appraised value be closer than the list?

One thing that was surprising. Jeweler Mutual suggested that appraisal should include local tax or they won't pay it. However my appraisal did not include local tax so JM won't pay it. Since the appraise value is higher than list, I think I am still covered (as long as I get the stone again from Good Old Gold or some place with a decent price).

Paul

The replacement value is describing the expected necessary budget for the insurance company to replace the insured item with another of like kind and quality in the customary market.  This market may not be where you bought it.  In fact, if you bought the diamond from one of the online vendors, the ring from another and had it assembled at a 3rd, its’ NOT where you bought it.  This selection can make a considerable difference in the price.

Yes, an insurance appraisal for a ring purchased at Tiffany’s will generally be for more than a superficially similar and equally lovely ring purchased at Good Old Gold.  Why?  Because a  new Tiffany ™ ring can only be replaced by the insurance company with a similar ring bearing the Tiffany’s brand.   Anything else is not ‘like kind and quality’.  The customary market for these is Tiffany’s. You paid extra to get that little blue box and the company would not be fulfilling their contract if they don’t replace it with one.  The same is true if you buy the house brand from GOG, by the way.  It would not be a valid replacement unless they either got a new one from GOG or convinced you to accept something else as a substitute.

Sales tax is an interesting problem that gets debated regularly amongst appraisers. We don’t all do it the same way. JM would be hard pressed to stand by the rule you’ve described.  I’ve seen them do hundreds of claims and this has never been a point of contention.  Sales taxes are not part of the property, they are part of the transaction costs, sort of like shipping and the adjusters payroll expense.  In the replacement process it may be necessary for them to pay these costs (or not) but this doesn’t make them part of the definition of the subject property.  The only time I can see this applying would be if they ‘cash out’ the policy for the full face value.

An interesting problem for appraisers who include sales tax is deciding on what rate to apply.  Where is the customary market?  In the Denver metro area, there are dozens of different tax rates depending on where you shop and they vary considerably.  As it happens, my office is in one of the lowest tax areas. Should I, as an appraiser, use the tax rate charged by my neighbors, the rate charged downtown, the rate where the client lives or something else entirely?  If the market being described is downtown, should I also include parking expense?

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

There's never a crowd when you go that extra mile.

Jennifer Thornton-Davis
In Depth Appraisals

There's never a crowd when you go that extra mile.

Jennifer Thornton-Davis
In Depth Appraisals

Jeff Averbook, G.G.
Graduate Gemologist since 1986. Member NAJA. Life Member AIN.