Appraisal Value

[cavsfan3]

I just bought an engagement ring and my jeweler got an appraisal done for me. I guess the appraisal value just determines how much my insurance will cost on the ring. Is it normal for the appraisal value to be more than what I bought it for? I bough the ring for $4,400 and it got appraised at $6,000.

Any information will be greatly appreciated as this is my first time buying any expensive jewelery.

 

[Christina...]

some insurance companies will allow you to insure with your receipt and the lab report. I'm actually surprised that your jeweler didn't inflate the value even more....many do to make you feel as though you got a fabulous deal! Some people prefer to insure their rings for cost + 10% or some amount that they are comfortable with to avoid having to have a new appraisal done should diamond prices rise over the years, but some insurance companies automatically adjust for this, so you should ask your particular insurer.

 

[AprilBaby]

I insure for replacement value.

 

[sakari_8]

Appraisal Value is always more than the price you paid for the product and usually stores give double the value of appraisal and make it sound like good deal, this is common practice however important is if the product is right, if you are satisfied with the price and the product than all sounds good.

 

[yennyfire]

I learned the hard way that insuring for appraisal value is a waste of money. When my ring was lost/stolen, I was given the replacement value, not the appraisal value (which was way more than the actual cost to replace the ring) and therefore, had been paying higher premiums for years based on the appraisal value. Of course, the insurance company did not refund the difference in premiums between replacement value and appraisal value. I now insure my jewelry for cost + 10%....that way, I can replace the item if it's lost/stolen, but I'm not paying ridiculous premiums for no reason...

 

[denverappraiser]

The usual definition of value for insurance appraisals is the expected budget required to replace the item with another one of like kind and quality, new, at retail, today.

That leads to all sorts of misunderstandings. If your one of the PS regulars, you probably didn't buy that way. As pointed out, the insurance companies usually don't replace that way, and the date of loss usually isn't the same as the date of appraisal. Things change over time.

Competent appraising takes some practice, it takes some training and it takes some work but it's not rocket science. Unfortunately, the 'free' reports issued by jewelers rarely are adequate to the task. If you've got an appraisal written by someone who was working for YOU, not the jeweler, and you feel that their value conclusion is out of whack with reality, call them up and discuss it. Communicating their findings to you and explaining their reasoning is part of what you paid them for. If you don't, consider getting one.

The comment above is correct, by the way, that the usual payout procedure on insurance has to do with what the insurer will need to pay to replace the item. The value conclusion from your appraiser only comes into play at replacement if it's too low. Your historical cost doesn't EVER come into play. They will shop on the day of replacement using the description from the appraisal as the definition of 'like kind and quality'. They're pretty savvy shoppers and that description and the photos accompanying it are the core of the replacement process. They'll use it as a purchase order to the providers being considered and will go with the lowest cost they can. Procedures vary on what providers are considered but usually they have a list of 'approved' sources that they beat up in advance to give them cost plus sort of pricing. Some have very short lists (like USAA), some include nearly everybody (like Jewelers Mutual) and some require the jewelers to apply for inclusion but are relatively easy about it (State Farm and most of the other standard sorts of insurers). Interestingly enough, this pricing model routinely has them paying more than what savvy shoppers here pay for things. That is to say, your cost on a loose diamond through the Pricescope model would usually not be sufficient to replace it with this methodology.