Why You Should Have Your Jewelry Appraised and Types of Appraisals.
Insurance Replacement
The foremost reason you need to have your jewelry appraised is for insurance replacement value in the case of loss. An appraisal provides you with protection of proper reimbursement. In the unfortunate event a loss should occur you have a certified document describing your item in exact and extensive detail (i.e. stone measurements, clarity and color), as to the quality and value of the item along with a digital color photograph so a replacement as close to the original item lost can be provided. Diamonds and gemstones of the same size can range drastically in value according to their specific quality and characteristics. Therefore, you are protected and ensured that what you are replaced with is on a par with the item lost. The appraisal also serves as proof of ownership and could assist in the recovery should the item be stolen. Another very important factor to consider in appraising your jewelry is appreciation. Diamonds and gemstones increase in value over time so an item purchased several years ago (i.e. engagement ring or heirloom) has increased value in today’s market. Unless you have the item insured for the proper value you would not have the adequate coverage necessary to replace said item. Most insurance companies provide a minimum amount of coverage (i.e. $1000.00) in the standard homeowners or rental policy. If a ring that was purchased for $10000.00 is lost you would be left with an inadequate replacement amount and therefore would be responsible for a significant out of pocket expense to replace the item.
Fair Market Value
Other types of appraisal include Fair market Value which is defined by treasury regulation 20.2031-1(b) and states “the fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property is not to be determined by a forced sale price, nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate.”
A Fair Market Value appraisal is appropriate in cases such as divorce dissolution.
Estate Appraisal
An Estate appraisal value is lower than an appraisal done for insurance purposes since it does not take into account prices for labor, fabrication, designer names or today’s marketing costs and again is based upon what a willing buyer and a willing seller would agree upon without a forced sale.
When having an item appraised be sure to convey the reasons you are seeking an appraisal to the appraiser so the proper type of appraisal can be performed.
