Small appraisal topic and item...

[Regular Guy]

Hi, sorry it's been a long time.

So, I have a small item only in the hundreds of dollars.

But, for stud earrings, would you rather have a higher quality in the description and a $775 valuation.

Or, lower quality in the description, but the higher valuation of $895?

If they are lost, I'd like the insurance to cover what's needed to replace them for... since my wife likes them, and I'd like another set of ideal cut diamonds to replace them, I'm thinking I may have to reject what an insurer would give me, and I'd then have the cash to work with instead of actual replacements, and the larger valuation then may serve me better? Otherwise, logically, given a replacement policy, the higher quality at lower cost would seem to leave me more protected, since they represent they'll replace like kind.

Facts:

Current description that probably came with receipt:

18 KT WG Pre-set Classic Martini settings with friction to feature approx .56 CTW GH SI2 select ideal cut diamonds. Valuation is $775 and is what I paid.

I bought these about 2 years ago (?), and it's the last one of the type of ready set go ideal cut diamond studs our preferred vendors seem to provide. To replace them now, I believe I'd have to pay near twice that, or at least over $1K. I am looking to change home insurers, so thought to pursue a modest appraisal that would update the valuation, so I could replace them in the case of a loss, with what it would really take to get them again.

So, I did go to a jeweler that it was easy to go to. The shop has been in my old neighborhood, absolutely sells jewelery (but hey, it was $55), and they do an internet business on the side.

I showed a guy in the store the original write up, but he wasn't too interested in what was written previously. After things settled down in the store, near 20 minutes later, I had an appraisal with the following detail:

Two round brilliant cut diamonds measuring approximately:
Carat: .50 (approx)
Color: I-J
Clarity: SI2

After I got the appraisal, and reviewed it briefly, I was a bit surprised the valuation wasn't higher. His brief explanation was that their cost basis on the appraisal explained was generally sort of double, and then he took out of the case a pair of studs they sold for closer to $500.

I just briefly compared them for size and confirmed they were both probably near 1/4 carat each.

After leaving the store, I considered going back, and asking them to consider cut as a feature. I see that from other contemporary posts this feature wouldn't do much for their valuation, but including the term might at least let me ask for this feature, when I sought the ostensibly needed replacement. Though I haven't gone back, I could.

So...there you have it. An appraisal ostensibly allows an insurer to take money from me with evidence that is vouched for that they don't have glass to begin with. On that sort of basis, it's conceivable I should go with the higher valuation.

Frankly, thinking anew about why I was seeking an appraisal to begin with, I'm not sure I had a good reason to begin the process? On the basis of seeking replacement of like kind, by having a lower valuation, I have a chance of paying less to get more.

But, I suppose I was seeking the protection of a realistic valuation, since...if I don't like what the insurer would provide a replacement with, all I would expect would be the dollar amount I insured the studs for, and I could go back to BGD today (to replace these there today I would need to pay in excess of $1100, however, those today are AGS and those 2 years ago don't have the certificate, but have the impramatur I was satisfied to have), or WF (actually, their smallest size seem start larger than I purchased then), and replace them.

At these smaller dollar price points, things may get a bit skewed.

I'm thinking to insure for the higher quality description and lower valuation. But...this is probably an old story (I've told myself, but now with real items backing up the story). Any comments supporting either approach, or for that matter a third solution involving modifying the newest appraisal are welcome. But, I figure that supplementing a payout with the additional cash to effect a replacement, if I don't get from the insurer what i want, won't be so bad...with either appraisal, really. So it may be academic.

By the way....I did go through this same process near a year ago with my wife's engagement ring, and in that case, I actually went back to my original appraiser. I was happy to get an updated appraisal then with a higher valuation. In addition, like I did with the first appraisal, I pushed then for the inclusion of the print out from the HCA. He didn't want to do it initially, but kindly relented.

As I reflect once again, I wonder if in anyone's next approach to an appraiser, if the importance of capturing any essential detail shouldn't be discussed before hiring the appraiser. I think Neil frequently affirms this, and I suppose asking to document the ideal cut before agreeing to their taking the job might have been a requirement of mine from the outset. In this case, you live and learn.

Thanks in advance,

Ira Z.

 

[denverappraiser]

Ira,

I’m not impressed with either description but there may be more details in the report(s) that I’m missing along with the relevant photographs that would make the difference. The purpose of an insurance replacement appraisal is to write what amounts to the purchase order for the replacement should the occasion ever require and to provide sufficient funding to allow that replacement to happen in the appropriate marketplace.

More-or-less, the first one seems to have done exactly that although a bit of explanation of the grading scales and such and the sources of the data is called for. Usually sellers know actual weight rather than approximate for example. ‘Select Ideal’ is not a standard sort of grade so it doesn’t stand on it’s own. I’m much more concerned about the second appraisal. Color dropped. Size dropped. Cut disappeared. These are not tiny details, as you know. Did you discuss this with your appraiser, either before or after they wrote the report? Did you show them the original report? What did they have to say?

Basically, the procedure at the insurers is to use the description from appraisal you submit as the purchase order for the replacement. They’ll take the description sans price and send it on to one or more of their pre-approved vendors to get a bid to supply a replacement that meets or exceeds the specs. Procedures vary a bit and some have bigger lists of suppliers than others but generally, as long as the quoted price is below the declared value, they proceed. You pay whatever deductible you have on the policy directly to the jeweler, they bill the remainder to the insurance carrier, and you get your new item. It doesn’t make a bit of different how much surplus coverage you have by declaring a higher value.

If the replacement cost is MORE than the declared value there are a few options and these too will vary between companies. With some, you simply make up the difference out of pocket. With some they cash out the policy at face value and you can do whatever you want. With some they’ll force you to go to a different supplier. With a few they’ll pay anyway up to a formulated limit as long as don’t think there’s fraud going on. As will all things insurance, this sort of thing is in the details of your policy and they are NOT all the same. They vary from company to company, from state to state and from policy to policy. This is what your agent is for.

I point this out because those two reports will have very different results through this claims process, regardless of the value conclusion. Presumably the point of getting this done was that you wish to be properly insured in the case of a loss. In the first case I suspect you’re not because the insurer won’t accept a 3 year old document and in the second it’s because the description isn’t sufficient to define ‘like kind and quality' for purposes of replacement.

Documenting the idealness, or lack thereof, should absolutely have been part of this assignment but if you didn't discuss it then they had no way of knowing that's what you wanted to know and, in defense of appraiser #2, that's not usually the question when people come in with quarter carat studs. What they want is fast and cheap service, which doesn't leave a lot of time for cut grading.

 

[Modified Brilliant]

I agree with Neil. It IS uncommon for an appraiser to be checking "cut" regarding total weight studs of that size.
Once the appraiser knows that these are "ideal" cut diamonds and were purchased as such from a reputable source, then that
information should definately be included in your appraisal. Always spend some time talking to your appraiser before the process begins and express your expectations and concerns.

 

[Regular Guy]

Thanks gentlemen. I WAS looking for something quick. My own review of what I really wanted actually came forward only as I typed my query into Pricescope, and I can see the question of cut was important and you affirm my self assessment of the error in my ways.

Going to Blue Nile last night, I saw the difference between stated assurance between good cut and ideal cut in like studs is in fact $500 to $1000 or so respectively. Now...do I take the diamonds back there with the report, and restate my case, or submit to insurance as is, which I've been delaying now for some time. Time IS money, too.

All best,

Ira Z.

 

[diamondseeker2006]

Ira, honestly, I'd never insure a pair of earrings under $1k, because most of us can probably self-insure for items like that. I only put insurance on the things that would be a real financial strain to have to replace. And even so, I don't insure many things as the premiums add up and I am willing to take on some of the risk. In addition, even making small claims can result in your premiums going higher for the things that really need to be insured. I do keep valuations in case of a house fire or something where homeowners covers the contents, and either of those would suffice for that purpose.

 

[denverappraiser]

Thanks gentlemen. I WAS looking for something quick. My own review of what I really wanted actually came forward only as I typed my query into Pricescope, and I can see the question of cut was important and you affirm my self assessment of the error in my ways.

Going to Blue Nile last night, I saw the difference between stated assurance between good cut and ideal cut in like studs is in fact $500 to $1000 or so respectively. Now...do I take the diamonds back there with the report, and restate my case, or submit to insurance as is, which I've been delaying now for some time. Time IS money, too.

All best,

Ira Z.

I would start by calling up your appraiser, in this case #2, and explain your problem. Send them a scan of the first report, and possibly also of the receipt, and ask them their thoughts. They may or may not need a second inspection to resolve this. Ask.