What if the appraisal is too high?

[EnterTheSwamp]

I took the engagement ring to an appraiser who then proceded to appraise it for $16,000 when I only paid $9,200 for it. He even had the GIA report to compare his evaluation to. The appraisal seems a bit excessive, and not even close to what I paid for it. The problem is that I want to get insurance, and a place like jewlers mutual will charge me double for a ring that cost 16k as compared to 10k. What doesn''t make sense to me is that they will replace the ring with something similar, so the appraised value is in essence not important. Or is it? Does anyone have any insight with insurance and some possible advice?

 

[Skippy123]

Are you asking for insurance purposes?

 

[kenny]

Can you just insure it for $9,200?
That would lower your premium.

It think Insurance companies like to make more money so they like high appraisals.

 

[Regular Guy]

Date: 1/3/2007 12:16:18 PM
Author:EnterTheSwamp
and a place like jewlers mutual ...

Maybe Sue Fritz from JM is reading?

I think she addressed this explicitly, albeit leaving some questions, before, in items in value below $5K. Maybe they have an explicit policy on this, or maybe not. Asking could only help. (BTW, consistent with Kenny's choice, for under $5K, I think Sue said it was "your choice," about what to cover it for, leading one to think you either choose the higher or lower number, leaving you at what risk or advantage in either case...I'm not sure).

 

[kenny]

Every diamond I have bought from our reputable PS vendors came with appraisals showing a price much higher than what I paid.

It is insane, but that''s just the way it is.

 

[Regular Guy]

Date: 1/3/2007 1:23:26 PM
Author: kenny
Every diamond I have bought from our reputable PS vendors came with appraisals showing a price much higher than what I paid.

It is insane, but that''s just the way it is.

Really, Kenny, I thought GOG''s tended to be closer to the vest.

Are they all...the ones you''ve used...proportionally the same, high?

Don''t be shy to name names, as I thought I had read that there were some differences here.

 

[:)]

Did you tell the appraiser you purchased off the internet? The appraiser may have assessed for a b&m retailer or Tiffany''s type of purchase which has a higher markup than internet and thus would cost more to replace with ''like''.

 

[diamondseeker2006]

This is frustrating to me, too. Most of the time, I insure for the purchase price. That way, the amount we spent is protected. I am not so concerned about the "replacement value" because I don''t want to pay inflated insurance premiums. I provide the description from the appraisal and a copy of the purchase receipt and specify that I want it covered for the amount we paid. I wouldn''t mind an appraisal that was slightly inflated for purposes of rising prices over time, but 30-50% more than we paid is ridiculous, to me at least.

 

[oldminer]

We offer "Discount Retail Replacement Appraisal Value" and "Near Wholesale Retail Replacement Value" when folks tell us they prefer more conservative mark-up numbers than full retail replacement value. Most people really like the "feel good" report with regular B&M full pricing. They somehow equate a high appraisal as an endorsement of their buying prowess. We never promote less than a full retail replacement value report, because it adds to the confusion many clients already have had enough of by the time they see us. Most expect a report higher then the actual price. We want to be helpful, but we don''t want to teach the subject of appraisal to each client. That''s a bit over the top. For people in the know, we can offer many more complex choices.

If a person wants an estimate of value approaching Internet range retail, the Near Wholesale Retail Replacement Value will give them a non-inflated view. If a person shopping in a discount area such as 47th St. in NYC or Sansom St. in Philly, then a Discount Retail Replacement Value will usually be more useful than a higher report. Even when we suggest these options most people want the full number. They use this to impress their friends, and family, I suppose. They overpay on insurance to some extent, but they have a good cushion in place in case of inflation and a loss a year or two down the pike. Its not a major issue for many people, but anyone who wants to fine tune their appraiser can ask for this sort of valuation modification. Any appraiser unfamiliar with the approach can contact me directly for some assistance in wording and in mark-up ranges to use. Its far from a top secret affair. Glad to share.

 

[kenny]

I'll have to check to see if they are a similar percentage high. I think I have 4 of them.

Frankly the first one was a long time ago and I that one was was VERY high. (40% I think)
Then I didn't really look too closely at the next ones since I consider them to be nonsense anyway.

I have read the "reasons" for this a few times her but still, if you pay $1000 for something and it comes with a piece of paper that says it appraises at $1,400 it is nuts.

I think a big reason for this is so the woman can think the man spent more money - at least that's why there is not more of a stink.

 

[fire&ice]

If I recall correctly JM charges a premium for stones over 15k? That may be for the large difference in cost.

You usually can insure for whatever amount you want. I do all the time.

 

[Richard Sherwood]

Appraisers usually appraise for an average retail replacement value from a bricks & mortars jewelry store, as that is where most consumers purchase their diamonds.

That price will invariably be higher than an internet pricing, which is the most competitive pricing in the world today.

If you appraise at internet pricing, the consumer will often not be adequately covered in a 3 short year period of time. Most insurance companies recommend re-appraisals every 3 years, and many make it mandatory every 5 years.

30% over internet purchase price usually covers most people over a 5 year period of time, and falls into the average retail replacement cost of a bricks & mortar jewelry store (the most common market).

 

[Modified Brilliant]

Date: 1/3/2007 10:19:59 PM
Author: Richard Sherwood
Appraisers usually appraise for an average retail replacement value from a bricks & mortars jewelry store, as that is where most consumers purchase their diamonds.

That price will invariably be higher than an internet pricing, which is the most competitive pricing in the world today.

If you appraise at internet pricing, the consumer will often not be adequately covered in a 3 short year period of time. Most insurance companies recommend re-appraisals every 3 years, and many make it mandatory every 5 years.

30% over internet purchase price usually covers most people over a 5 year period of time, and falls into the average retail replacement cost of a bricks & mortar jewelry store (the most common market).

Richard,
Your explanations are right on the money (no pun intended).
I''ve noticed the gap between "low retail" and" internet pricing" has closed considerably over the last couple of years.
Some B & M independents are willing to lower their prices to capture the savy diamond consumer and make the sale.

www.metrojewelryappraisers.com

 

[strmrdr]

Date: 1/3/2007 10:19:59 PM
Author: Richard Sherwood
Appraisers usually appraise for an average retail replacement value from a bricks & mortars jewelry store, as that is where most consumers purchase their diamonds.

That price will invariably be higher than an internet pricing, which is the most competitive pricing in the world today.

If you appraise at internet pricing, the consumer will often not be adequately covered in a 3 short year period of time. Most insurance companies recommend re-appraisals every 3 years, and many make it mandatory every 5 years.

30% over internet purchase price usually covers most people over a 5 year period of time, and falls into the average retail replacement cost of a bricks & mortar jewelry store (the most common market).

Well said

 

[sfritz]

Hi, Ira! Yes, I am reading the discussion. For items with a purchase price more than $5,000, we require an insurance evaluation or appraisal with the retail replacement value for a bricks&mortar store. When one of our insureds loses or damages a stone that requires replacement, our experience shows that few want to spend a lot of time searching the web for the right stone. They want the stone (and setting, if needed) replaced right away and that usually means working through their local jeweler.

On the other hand, we do NOT advocate insuring jewelry at inflated values. The ring owner should contact the appraiser and verify the value for insurance purposes. Explain that you are not seeking an inflated value, but one that would permit you to replace the item if a loss occurs.

We have up to three rating levels, depending on the state where you live. In most parts of the country, our rate increases at $15,000 and $35,000. In the northeast states, the rate increases only at $35,000. You can use the rate calculator on our web site to get a premium estimate or complete an online application.

Sue Fritz
Jewelers Mutual Insurance Company

 

[RockDoc]

Sue....

Question for you.

In the event a claim is settled for less than the insured amount, does JM return the unearned premiums to the insured?

Is there a deductibe with JM?

Rockdoc

 

[sfritz]

Date: 1/4/2007 5:03:47 PM
Author: RockDoc
Sue....

Question for you.

In the event a claim is settled for less than the insured amount, does JM return the unearned premiums to the insured?

Is there a deductibe with JM?

Rockdoc

Hi, Rockdoc. We offer several deductible options, including no deductible. Most of our customers choose no deductible.

The loss payment amount and unearned premium are two different issues. We pay many partial losses that are less than the insured amount.

In the event of a total loss (i.e., the item must be replaced), we return unearned premium and cancel the coverage for that item since it no longer exists or is damaged beyond use. If there are other items covered by the policy, the policy remains in force. When the item has been replaced, the customer sends us the new appraisal/insurance evaluation for the replaced item so we can resume coverage for that item.

Unearned premium is the prorated premium from when the loss occurs – and coverage ends - to the end of the policy period.

Sue Fritz
Jewelers Mutual Insurance Company

 

[:)]

FYI - to calculate premiums on JM as she mentioned..

http://www.insureyourjewelry.com/

 

[starryeyed]

Hi EnterTheSwamp and Welcome to Pricescope!

I have insured my jewelry as a rider on my homeowner''s insurance. I have purchased several pieces for prices that I probably wouldn''t be able to replicate in the future. What I''ve done is send my insurance company a copy of the appraisal and a copy of the invoice. They have told me it''s my prerogative how much I want to insure the piece for. Generally I pick a number somewhere in between the purchase price and the appraisal price. That number is a number at which I feel confident that I can replace the piece. My policy adjusts each year for inflation.

Hope this helps.