Appraisals | Appraisal Types | Care
Appraisal Types
After purchasing a piece of Jewelry, we highly recommend that it be treated as an investment. In doing so, obtaining insurance for the piece should be your first step. In order to include your new piece on an existing policy or open a Jewelers Mutual policy you must first have it Appraised by a GIA Graduate Gemologist. As one of only four Jeweler’s Association Certified professionals in San Diego, Diamonds Forever is an ideal place to have your new and old jewelry appraised. In addition, we suggest you visit Diamonds Forever every 3-6 months to have your jewelry inspected and cleaned free of cost. We also highly recommend that you secure a separate policy for your jewelry rather than attach it to a homeowners or renters policy. In the case of the latter, a loss could raise insurance rates on your home.
Beyond the Replacement Value Appraisal, there are two other types of appraisals, all of which are described below.
Replacement Value
This type of appraisal is required to obtain insurance on the piece
and is what makes exact replacement of a lost or stolen item possible.
Caution beware!!! Most Jewelry stores will provide an appraisal with
an inflated replacement value in order to make the buyer feel like
they received a “good deal”. This will negatively affect
the buyer in the case of a loss, because the insurance company is
likely to research the actual value and give you a much lower payout.
However, you have been paying inflated premiums based on the higher
value all along. This type of appraisal can also be used to verify
a sellers stated quality, and therefore, value. The replacement value
on the appraisal is supposed to be the medium price for the piece,
not the high or the low.
Liquidation Value
This value is based on the sellers need to exchange the piece for immediate
cash, a “fire sale”. As with the sale of any item, in
desperation, the need to find an immediate buyer lowers the sale price.
Fair Market Value
This type of appraisal is most often applicable in the case of a divorce
settlement. The value is based on the notion of having a willing buyer
and a willing seller (neither side of the deal are acting in desperation).
Comparable sales (similar to Comps in the real estate market) are
used to determine value in this type of appraisal.
- Estate
This is a Fair Market Value that contains additional legal information in the appraisal and is used to establish inheritance taxes on an estate. - Donation
A Fair Market Value is also used for tax deduction of donated jewelry. - Casualty or Post Loss
This is a Fair Market Value for lost or stolen piece that was not previously appraised. It is based on the customer’s description and photographs. With this type of appraisal, the IRS allows you to take a partial tax deduction for the item.
Diamonds Forever is a preferred replacement specialist and works on your behalf with the insurance company to insure that the replacement is of equal or superior quality to your lost jewelry.
