DBM
Shiny_Rock
- Joined
- Oct 24, 2006
- Messages
- 404
Daniel,
As Ira mentioned, it’s pretty unusual although I’ve done a fair number of them for PS customers who have read the various discussions on this issue. Outside of Pricescope, few people think of it.
It works pretty well but it does require 2 appraisals, one for the planned ring and one for the completed item. To the best of my knowledge, Jewelers Mutual is the only company that is willing to accept an appraisal describing an item that does not yet exist and a plan for it’s creation as the basis for an insurance contract.
As far as the legality of it goes, there’s no problem. As long as the appraiser accurately reports what he/she did or did not inspect and reports it in a way that could not be construed by a ‘reasonable and prudent man’ as an intent to deceive then there is no particular problem with a hypothetical assumption like this. Other insurance companies will simply refuse to bind a policy on the basis of this type of appraisal. I’m reasonably confident that JM does it as a competitive issue because it results in long term customers for them. I wish them only the best at it. It’s a wonderful benefit to consumers, it’s a benefit to me and I hope it continues work out well for them.
This sort of reporting is very much like post-loss insurance appraising where property has been lost or destroyed and the client (usually an insurance company) is trying to estimate the value on an item that the appraiser can’t inspect.
Many setters will not take liability for damage to a stone caused during setting. I believe Leon is an exception to this but you should ask him. This puts clients in the position of buying a diamond and being uninsured until the ring is completed and appraised.
Jewelers Mutual has started a special program to cover this situation. If you have the diamond appraised loose and submit a plan for the final ring, you will be insured as soon as the appraisal is submitted and the policy is accepted by their underwriters. If you have ERD ship it to one of the independent appraisers that they work with, the stone will be covered by ERD’s insurance while in transit to the appraiser, the Appraisers insurance while in their possession, and Jewelers Mutual while in the jeweler’s possession and for the ensuing year. There are several appraisers who can do this and deliver your appraisal electronically effectively leaving you with no gap at all. You are covered from the time the diamond vendor ships until you decide to cancel your policy with JM. Even if, for some reason, JM decides not to bind the policy, you are covered because the appraiser can ship back to ERD and it will be under their policy (or their chosen shipping company).
It’s a little convoluted but it works pretty well. For clients who were going to get an independent appraisal on the stone prior to setting as part of the shopping process anyway, this results in insurance coverage during the setting at a negligible additional cost to you. For those who are on the fence about whether a pre-setting inspection is worth it, this may be the deciding factor.
in what is described above, you''re just getting this as an unintended bonus.
Daniel,
An appraiser must declare a valuation date for an appraisal to be useful. This makes sense because the value of things change over time. What’s it worth to whom, when and under what conditions are the questions that the appraisal report should be answering.
The situation you are discussing is not one of pre-dating, it’s one of post dating. The appraiser presumably inspected some or all of the components in advance and is writing a report that won’t become valid until some date in the future when the ring is actually assembled and actually delivered. This is dicey for both the appraiser and the insurance company. How, for example, do they know that the diamond and/or mounting weren’t damaged during the assembly process? The classic rule for appraisers is that you should appraise things for what they are, not what they might become. The exception to this comes into what’s known as hypothetical assumptions and these need to be prominently declared within the body of the appraisal. With the exception of the above, most insurance companies will not bind a policy based on such hypothetical assumptions as whether the piece actually exists.
I, of course, understand the objective. You would like to sell things and deliver them with sufficient paperwork to allow the buyers to insure them immediately without the need to visit your competition to get the thing appraised. That’s inconvenient to them and risky to you if they choose an incompetent appraiser. This is not impossible to do but the appraiser needs to write their report with a bit of care and to be especially careful to properly describe who examined what and when. They can, for example, examine some or all of the components in advance and have someone else take the final photos and do the final inspection. This is just fine, as long as it’s properly reported so that the reader properly understands who did what and can make a reasonable decision about whether to rely on the information contained in the report. The appraiser, meaning the person who assigned the value and who is signing the report, is legally responsible for the accuracy of the entire contents and they should choose their assistants accordingly. The person doing the inspection should also sign for their portion of the report.
It’s worth noting that meeting the minimum standards of the insurance companies is usually very easy. I think the companies are being a bit dumb to be so casual about paperwork but it’s the clients who should hold appraisers to higher standards. They’re they ones who are generally protected by a proper appraisal.
Comment for statement in red. I think that this is the whole point of the exersize Neal, to protect the buyer from the possibility of the ring being damaged during the making of the jewelry. As long as this is disclosed and the ring proplerly examined after manufacture, I think the client, the vendor and the Insurance Company are all being well served.
Wink,
I have no problem at all with you or your staff (if you had one) preparing documents for this purpose and I wouldn’t expect any insurance company to have any problem binding a policy based on one. Because you have intimate details of the sourcing, I would say you are MORE prepared to document your own sales than an independent. I certainly understand the damage that bonehead appraisers can do when they don’t understand the question, don’t understand the answer … or both. In many cases this problem lies at the feet of the consumers who won’t bother to mention details like the cutter of the designer either because they don’t know or because they are looking to ‘test’ the appraiser but it can also be in poor training or poor ethics on the part of the appraiser. If all, or even most jewelers would provide thorough documentation like you do, there would be little need for the kind of services we’re discussing.
My comment to Daniel mostly had to do with the date and the signatures. It’s a common practice for jewelers to prepare a report that remains digitally in the jewelers file until the customer buys the merchandise. They then print up the report and deliver it. They like to have someone on their staff with a few gemological or appraisal credentials to sign the report because it improves the credibility. For most insurance purposes this is entirely acceptable but there are several details that regularly get omitted from this:
I don''t recall ever seeing one of your reports but I would be very surprised if they suffer from any of the above problems.
LOL! Oh my it would be nice to have the time and the staff to have the appraisals done beforehand, on the rare occassions when we do not create the piece at the time of sale that is. Sigh.
