Why should I get my diamond appraised?

[downloadduckss]

I don't get it... if we are to sell the diamonds we bought from whiteflash/bluenile/jamesallen etc at a fraction of the cost as to getting it at the store, why can't we ever sell our appraised diamonds at the price (close to) of it being valuated at?

What is the point of getting the diamond appraised other than verifying the stone is indeed the stone described on the GIA/AGS report? I mean the "appraised value" has no relevant meaning all isn't it.... plus we can never get anything close to the appraised value anyway if we sell the diamond!

 

[minmin001]

so you can get the insurance on your diamond based on appraised value? so if anything damage or lose on the stone you can get money to replace it.

 

[nfowife]

There are different appraisals for different purposes. An appraisal for reselling is going to be lower than for insurance. Just like a used car is worth less $$, so is a secondhand stone. You as an individual do not have the reputation and backing that a jeweler has, so joe schmo off the street isn't going to be willing to pay you the same top dollar he would pay the jeweler for the same item. Just the way it is.

For an insurance policy, the appraisal is usually about 10-20% above what you paid, the "retail replacement value". This is in case you lose your ring/stone, and it has to be replaced. You want to ensure you are properly covered. If you have a loss and make a claim, and the insurer cannot replace what you had for the amount of your policy, they will cut you a check but then you'll be out the item and not have enough money to replace it yourself.

If you are purchasing from a reputable vendor you don't really need an appraisal other than to make sure the stone and certificate match. Unless you want an unbiased opinion that what your buying is a wise purchase. But if you do your research you should hopefully know that beforehand.

 

[downloadduckss]

For an insurance policy, the appraisal is usually about 10-20% above what you paid, the "retail replacement value". This is in case you lose your ring/stone, and it has to be replaced. You want to ensure you are properly covered. If you have a loss and make a claim, and the insurer cannot replace what you had for the amount of your policy, they will cut you a check but then you'll be out the item and not have enough money to replace it yourself.

So essentially, if we buy the diamonds from the website, and get appraised for more than the value of what we paid for -- the insurance will reimburse the appraised value, thus leading to a profit (monetary wise; and a loss in physiological / emotional wise)

 

[Rockdiamond]

great question!!

Inflated appraisal values pose many problems.
The largest I see, on a routine basis, is sellers trying to convince potential buyers that the "appraised value" has some relevance to the price they are charging.
ie- "This ring is an amazing deal- it appraised at $25,000,000 but you can buy it today for $2.50"
If any seller is trying to convince you a diamond is a good deal based on appraised value RUN ( do not walk) away from the deal.

Another problem is consumers who are in possession of an appraisal that has the same misleading value. They think that's what the ring is worth- and are shocked to learn the appraised value has little or no relation to reality.

+1 to nfowife's advice.
If you're questioning a purchase, by all means have it looked at by an independent third party.
I'd question why anyone would purchase from a company they were unsure of- in fact part of the value of doing business with a well established form should be the comfort of purchase, which will allow the buyer to skip the cost and extra effort an appraisal requires.
Also, a detailed bill of sale may be sufficient for your insurance company.

The bottom line is, if you want an appraisal by all means get one- but many buyers are comfortable with reputable vendors.

 

[nfowife]

Well the same diamond can sell for a range of prices on different websites and brick and mortar stores. They all adjust a bit up or down depending on their overhead. That is why brick and mortar stores will sell for a bit more- they have higher overhead costs than an online-only type of vendor.

Also diamond prices fluctuate so you want a small cushion so that you are covered for a reasonable period of time- you don't want to have to get your ring reappraised monthly just to keep up with diamond prices!

And, no, if your appraisal says your ring is worth $50K, and you insure it for that and lose it, but in reality it was worth $30K....the insurer is going to replace your ring for the $30K it costs (with a comparable stone/setting) and basically you've just paid higher premiums than you should have....wasted your own $$.

 

[denverappraiser]

So essentially, if we buy the diamonds from the website, and get appraised for more than the value of what we paid for -- the insurance will reimburse the appraised value, thus leading to a profit (monetary wise; and a loss in physiological / emotional wise)

Most insurance companies are agreeing to replace a lost item with another of 'like kind and quality' or words to that effect. They are NOT agreeing to cash out for the face value of the policy in the case of a loss. The face value (which usually comes from the appraisal that you submit but that's not the only way) is the UPPER LIMIT of liability for the company and it's used to set the premium. It is not the expected amount to be paid in the case of a loss. It is highly unlikely that you will walk away from an insurance claim with a 'profit'.

People get new purchases appraised for a variety of reasons but the biggies are that they are concerned about getting what they thought they were getting; they want to get more information than the dealer wants to provide; they want to include a quality control step that is outside of the jewelers control; and they want to have paperwork that is more thorough than what the jeweler gives for 'free'. Whether or not this is useful to you will depend on your own requirements and on what your jeweler provides.

 

[Dreamer_D]

So essentially, if we buy the diamonds from the website, and get appraised for more than the value of what we paid for -- the insurance will reimburse the appraised value, thus leading to a profit (monetary wise; and a loss in physiological / emotional wise)

Most insurance companies are agreeing to replace a lost item with another of 'like kind and quality' or words to that effect. They are NOT agreeing to cash out for the face value of the policy in the case of a loss. The face value (which usually comes from the appraisal that you submit but that's not the only way) is the UPPER LIMIT of liability for the company and it's used to set the premium. It is not the expected amount to be paid in the case of a loss. It is highly unlikely that you will walk away from an insurance claim with a 'profit'.

People get new purchases appraised for a variety of reasons but the biggies are that they are concerned about getting what they thought they were getting; they want to get more information than the dealer wants to provide; they want to include a quality control step that is outside of the jewelers control; and they want to have paperwork that is more thorough than what the jeweler gives for 'free'. Whether or not this is useful to you will depend on your own requirements and on what your jeweler provides.

As usual, great response.

You can get cash value policies from some companies, like Chubb I believe.