Appraisal above purchase price, is this normal

[paulsiu]

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

 

[denverappraiser]

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

 

[paulsiu]

Frankly, I am confused by the tax issue. The JM agent on the phone suggested that I needed to buy coverage to cover the tax. So if you have a ring that''s 10K and you pay 10% tax, you''ll have $1000 tax. If your ring did require 10K to replace, you would have to pay the 10% tax. JM indicated that the won''t add the tax amount to the policy unless it''s included in the appraisal.

I guess this is a problem with the appraiser because tax rate changes from place to place. An item may be purchase in another state. The person may move to a different state.

Paul

 

[blitz]

Appraisal methodology: like, kind and quality in the most common market that the ITEM is found.
Buying at the internet market level is still not the most common place a person shops. I belive that Bluenile came in at the nations 10th largest, but that still leaves 9 other store front jewelry stores.

As for Jewelers Mutual, this is the first time I have heard of the required sales tax.

 

[denverappraiser]

Date: 2/9/2006 10:15:01 AM
Author: paulsiu
Frankly, I am confused by the tax issue. The JM agent on the phone suggested that I needed to buy coverage to cover the tax. So if you have a ring that's 10K and you pay 10% tax, you'll have $1000 tax. If your ring did require 10K to replace, you would have to pay the 10% tax. JM indicated that the won't add the tax amount to the policy unless it's included in the appraisal.

I guess this is a problem with the appraiser because tax rate changes from place to place. An item may be purchase in another state. The person may move to a different state.

Paul

Paul,

In general, pre-loss insurance replacement appraisals don't separately itemize every component of the replacement budget and the replacement company doesn't get the opportunity to pick and choose which elements they wish to replace. It's sort of an all or nothing kind of program. It's common for the major diamond to be described, priced and occasionally replaced separately but engraving, for example, will be included as part of the whole package. I see no reason for them not to include sales tax in this same category. It's just one of the elements required to make a replacement. They will generally wish to have an opinion about where the replacement is made and this decision is what will determine the tax rate.

There are several people from JM who are regulars here. Perhaps one of them will chime in and clarify their policies on this.

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

 

[Garysax]

I had the exact same issue.

I''m still trying to decide what to do; I don''t want to buy way more insurance than I need but if the amount I insure with the purchase price using receipts instead, for example, isn''t enough to replace my diamond with a like one by the insurance company then I''ll need to go with the higher number quoted by my appraiser. So I''m sort of stuck right now.

 

[blitz]

I just finished talking with a rep at JM. If a item is say $25,000.00 or higher, JM might consider adding sales tax. It is not mandatory.
Jewelers or appraisers can/not mandatory, add a sales tax, preferably itemized: $10,000.00 plus 0.0825% Los Angeles County. The client and insurance company can decide if to include insurance.

 

[diamond4ever]

I just had my loose stone appraised, I had purchased from a local jeweler. The appraiser was Harold Weinstein. The stone and setting cost $4300, tax in. The appraisal for stone alone is $6600.
Their service was not that great and they did not provide much question and answering.

In any case, the stone that I had purchased is a Canadian diamond. However, when appraised, it did not state that it was Canadian. It merely described the laser inscription, flying bird and serial number. It''s supposed to resemble a Canadian Goose.

I''m a little concerned with insurance and whether they will replace mine with a certified Canadian diamond.

By the way, my stone is Canadian certified, but it''s really just a piece of paper.

any advice, relating to insurance greatly appreciated.

 

[Modified Brilliant]

Date: 2/10/2006 3:15:45 PM
Author: diamond4ever
I just had my loose stone appraised, I had purchased from a local jeweler. The appraiser was Harold Weinstein. The stone and setting cost $4300, tax in. The appraisal for stone alone is $6600.
Their service was not that great and they did not provide much question and answering.

In any case, the stone that I had purchased is a Canadian diamond. However, when appraised, it did not state that it was Canadian. It merely described the laser inscription, flying bird and serial number. It''s supposed to resemble a Canadian Goose.

I''m a little concerned with insurance and whether they will replace mine with a certified Canadian diamond.

By the way, my stone is Canadian certified, but it''s really just a piece of paper.

any advice, relating to insurance greatly appreciated.

Diamond4ever,
You should consider calling the appraiser with your concerns. What expectations of yours were not met by your appraiser?

www.metrojewelryappraisers.com