To Appraise or Not to Appraise?

[D_]

Hello,

Just thought about this recently.
If I can get my diamond insured w/o having it appraised, is it still worthwhile to get the diamond appraised?

And let's say we need the diamond appraised to get it insured.
What if any of the component on the appraisal doesn't agree with my GIA/AGS cert?
From what I read if the appraisal report is better, say in terms of colour/clarity, it will only inflate the appraisal value and hence the insurance premium.
If the appraisal report is worse, then the insurance company may use the specs on that report instead of the cert to get a "comparable replacement" should something happen. (that and you also feel a bit sad inside...)
Either way, it seems like there's no win situation here.
Is it pretty acceptable/normal to say to the appraiser before he/she does the work to say that if his/her opinion doesn't agree with the cert, we want him/her to alter it? Will it be like saying "look, I respect your expertise and really wanted to know your expert opinion to make sure what we have on our hand is really what we bought but for insurance purposes it would makes most sense to follow the cert (who knows, maybe the lab misgraded)" or will an appraiser be offended if we even bring that up?

 

[chrono]

There's more to the appraisal than just the GIA lab report if you have a high quality diamond.

1. Is it branded?
2. Is it Hearts & Arrows?
3. Will it come with ASET and IS to show the cut performance?

If yes to any of the above and your lab report or appraisal does not state this, then the insurance company will find you the cheapest diamond they can find to meet the minimum carat weight, colour and clarity and that's it.

 

[D_]

Thanks, Chrono.

Yes, but the insurer has the receipt from the vendor and allows us to pick preferred vendor to get replacement from.

 

[Sundial]

I needed an appraisal for insurance purposes. I just gave my appraiser the AGS cert up front and asked him to verify that it was the same diamond. He included a copy of the cert with his appraisal.

 

[D_]

Won't that mean he'll just confirm what the certificate already states, esp. if it's border-line cases?
As in if the colour is G, but he thinks it looks like an F (because it's well cut, w/e), won't he just look at the cert and follow what's written on it?

 

[Dancing Fire]

Won't that mean he'll just confirm what the certificate already states, esp. if it's border-line cases?
As in if the colour is G, but he thinks it looks like an F (because it's well cut, w/e), won't he just look at the cert and follow what's written on it?

Don't insure the stone for more than 10% of what you paid, IMO that would be waste of money.

 

[JDDN]

Which insurance company are you working with?

Just asking because I like that they are allowing you to choose a preferred vendor for a replacement.

 

[D_]

JM - I hope my understanding is correct.
Considering other providers too (e.g. adding a rider to home insurance) but I think they'd want to see an appraisal report.

 

[mystiqkal]

I have a separate rider for my jewelry because my homeowners ins only covers up to 10k worth of jewelry. I've had all of my Jewelery appraised though, and provided the appraiser with the Gia reports. I've never had an appraiser write a discrepancy to the Gia.

I lost a pair of diamond earrings that were ensured and appraised at 11k. The appraisal came straight from blue Nile. Even though I was paying to insure that appraised value, they actually only paid me 7500 because they said that was what the cost would be for them to replace them. They won't let you get a rider without an appraisal though. My advice would be to ask your appraiser to give a realistic appraisal amount and not an inflated one. Also, ask that they be extremely detailed on the appraisal. If it's a special type of stone with a special type of plot make sure it's on the appraisal. Insurance is required to find you a stone of the same or higher quality. I asked my appraiser to add into my appraisal for my cushion cut ering that it was an 8-main brilliant 1.0 ratio square diamond with ex/ex. Your ins will only replace or give you the money that it would cost them to get a diamond with the same specs listed on the appraisal. it's easy to find a cushion to match color,ct, clarity etc. Much more difficult to find an 8-main cushion brilliant though. You want to make sure that they actually replace it with the same stone or give you the money to cover the markup for a difficult to find stone.

Btw, we used to ins with jewelers mutual but switched to AAA because AAA will actually cut you a check and let you find your own diamond/have your setting remade where you want or they'll use their preferred jeweler to find you the diamond and remake the same setting. JM will only replace like with like. Also AAA was about 100 bucks cheaper to insure all my jeweley than JM was. The catch is that they will only pay out what it would cost for their jeweler to replace it. But that's the same as JM replacing like with like. Also JM only insures if you're in the U.S. AAA insures us worldwide. Just some things to consider.

 

[D_]

Thanks, Ms Misty.

I think JM now covers worldwide too.

Btw do you know if there is an "expiry date" for appraisal report? as in can we use the same appraisal report 2-3 years later if we choose to switch insurer?

 

[denverappraiser]

You've brought up several different reasons to get things appraised already.

1) Your insurer may require it.
2) You're interested in whether the grading is better or worse than what the seller told you.
3) You're looking for confirmation that you got a deal.
4) You're looking for a set of specifications for replacement should occasion require it. This applies to the whole piece, not just the center stone.

Those are all good. I'll add a few more.

5) Confirmation that it's the same stone and in the same condition as what the seller told you.
6) Quality control for the craftsmanship.
7) Details on the other materials (metals, other stones, etc.)
Photographs.
9) Documentation of other things that may be important to you (like hearts and arrows, branding, customizations etc.)
10) Confirm or refute other things the seller may have told you that don't appear on the lab docs.

Some of this you may have, some maybe not. It's different with every customer. Assuming the seller provided reasonably detailed sales documentation, it's likely that this will be sufficient for your insurer. This is about meeting your objectives, not theirs. Documenting new purchases isn't rocket science but it does take a methodical approach and, I have to say, most sellers don't take the time to do it well but there's no reason they can't. It's more that people don't usually do their best work for 'free' and that sellers have an inherent conflict of interest in the process. Decent photography takes a bit of practice, if they even do it at all. Good paperwork pays off in the end if you need to make a replacement and it's you who are setting the standards, not the insurer.

Yes, I want to see the GIA when I do appraisals. I actually include a copy in the report. It's an important value element. That said, I'll normally grade the stone before I look at the report just as a matter of procedure. I'll then look at the report and discuss with the client any line items that are different.

The expiry is a tricky question. Some appraisers do it. I do not, and really it's an issue for the insurer. I'm describing and valuing an item as of a particular date, not predicting the future. It's a snapshot in time and, in that sense, the expiry is the moment you walk out the door. On the other hand, most insurers will be happy to continue to bind a policy with an appraisal that's years old. How often they demand updates will vary depending on the value of the merchandise, with more frequent requirements on more expensive goods. This requirement has to do with wishing an inspection of the condition as much as an update of the pricing.

 

[diamondseeker2006]

Thanks, Chrono.

Yes, but the insurer has the receipt from the vendor and allows us to pick preferred vendor to get replacement from.

No reason to get an appraisal assuming your items were purchased new. My insurance also accepts sales receipt describing item along with GIA or AGS reports. I want to cover the money I spent and not overpay insurance premiums from an inflated appraisal. It is necessary to get an appraisal on second hand items, heirlooms, etc. to establish replacement value. But on new retail items, you know the value...it is what you paid.

 

[Modified Brilliant]

Recently, I have seen more clients who have purchased from unfamiliar on-line diamond and jewelry vendors who have supplied their own appraisals. In most cases, the color and clarity grading were not even close to reality. The appraisal document, packaging, and presentation were the finest that I have ever seen...very "official looking" and would fool most any consumer. However, the information beyond the diamond weight was totally bogus. I tell my clients that at a minimum, there is no excuse not to get diamond weights correct. Beyond that, if you are making an on-line diamond purchase and settle for a lab report from a third-tier lab or unknown lab, you will oftentimes get inaccurate grading and an inflated value. It's unfortunate to see that bogus and inflated value reports still exist but they do. Buyer beware, as usual, and consult a qualified appraiser before you make a major purchase from a source where the price and quality might be too good to be true.

 

[D_]

Thanks for the input, everyone.

Wow, you were able to glean that much from my post, Denverappraiser.
That's amazing!

And glad to know you do this. Let's hope this is more of an SOP for most appraisers than exception.

Yes, I want to see the GIA when I do appraisals. I actually include a copy in the report. It's an important value element. That said, I'll normally grade the stone before I look at the report just as a matter of procedure. I'll then look at the report and discuss with the client any line items that are different.

DS,
I purchased it new a while back and you're right, I can probably get away without getting it appraised.
And yes, nobody is likely to have left anything on the table.
If the insurer allows us to select our preferred vendor that's good.
Otherwise this thought crossed my mind "maybe the sales receipt isn't enough because if the insurer just can/wants to source the replacement from local B&M store, since I bought it online, with the same amt of money most likely I won't be able to get comparable stone."
DA brought up a few valid points and I may do it even if it's just to know what the process is like.
Part of the learning process
When an insurer just uses sales receipt though, do they take into account some reasonable % to account for inflation?

DA, how do appraisers grade some elements that are usually done under specific setup at GIA lab?
E.g. diamond colour is graded unmounted face down in the lab, but appraisers have to look at it mounted.

 

[denverappraiser]

We practice a lot, but you're absolutely right that viewing conditions matter. Usually an appraiser will grade mounted color with a range for example. If they can then match the stone to a lab doc, like by using a girdle inscription or other clues, and that color falls within the range, the replacement description will reference directly to the lab papers. Obviously this isn't possible if you don't produce the documents. As fun as 'stump the gemologist' is for us, it doesn't usually help you all that much and given that a fair fraction of good appraisers charge by the hour, it may actually hurt.

Sometimes things simply aren't available. For example a grader can't give a girdle thickness on a bezel set stone. Their own notes will list that as n/a and replacement report will reference the lab to give a grade.

 

[Texas Leaguer]

We would not buy a new house without getting a professional inspection from a qualified third party. If we are buying a used car we will take to our trusted mechanic to go over it for any problems. So it only makes sense to do the same with a significant jewelry purchase.

I have a world of respect for qualified, independent appraisers. They have studied and continue to study the materials, markets, brands, etc. They know what to look for under the hood. And they know how insurance works and can advise you appropriately. And their fees are reasonable. I would say that a consultation from a true expert who has your interest at heart, easily pays for itself. If nothing else, in peace of mind.

That said, it is not always easy to find one! Since there are really no regulations on who can do jewelry appraisals, there are lots and lots of appraisers who do not have the credentials or the skills. And ethics is a whole other topic, with many appraisers working directly for merchants, or actively involved in buying and selling which creates a clear conflict of interest. Unfortunately, taking a new purchase to an appraiser who has interests other than yours is likely not to be in your best interest.

The good thing today is that it is easier than ever to find out about the businesses we are considering dealing with. Still, not everyone has easy access to a qualified appraiser. For those folks, being able to get coverage bound from a sales receipt is a reasonable and convenient thing to do. But only if you buy from a trusted merchant.

If you have the ability to seek out the opinion of a true expert with real credentials and affiliations with organizations devoted to consumer protection and ethical practice, take advantage of it. That is the best insurance of all.

 

[Texas Leaguer]

Recently, I have seen more clients who have purchased from unfamiliar on-line diamond and jewelry vendors who have supplied their own appraisals. In most cases, the color and clarity grading were not even close to reality. The appraisal document, packaging, and presentation were the finest that I have ever seen...very "official looking" and would fool most any consumer. However, the information beyond the diamond weight was totally bogus. I tell my clients that at a minimum, there is no excuse not to get diamond weights correct. Beyond that, if you are making an on-line diamond purchase and settle for a lab report from a third-tier lab or unknown lab, you will oftentimes get inaccurate grading and an inflated value. It's unfortunate to see that bogus and inflated value reports still exist but they do. Buyer beware, as usual, and consult a qualified appraiser before you make a major purchase from a source where the price and quality might be too good to be true.

Jeff,
This is interesting. It reminds me of when I first got into the business there were companies selling "investment" gems and they would come sealed and packaged with the most professional looking documentation from companies whose names sounded very impressive.

As a young gemologist I would regularly have clients come in with them and I would have to give them the bad news. The packaging was often worth more than the gem inside! In some cases the gem had some value, but only pennies on the dollar vs what they paid.

These companies would get phone lists of professionals and set up boiler rooms where hotshot, slick talking salesmen would spend all day dialing for victims. And they found plenty. As I recall the justice department finally got involved and cleaned that up a bit here in the US, and the scammers moved to Canada. I don't know what happened after that as I moved into a different end of the business. Are we seeing a resurgence of that kind of activity in the internet age? I would be kind of surprised if it was not happening.

I don't mean to hijack the thread but I am curious.