WHY DO I NEED AN APPRAISAL
The reason you need a jewellery appraisal is because Insurance Companies often do not make it clear when you take out a policy, (and if you subsequently need to make a claim on a lost or stolen item), problems can occur.
What they say is “you do not need to have an item specified up to a certain figure”, which can be as high as $5,000. However it is what they don’t make clear that can cause problems. That is when you are required to prove to them, what you had and what your item was worth at the time of loss. The onus of proof is on you, the client, to convince them that the item was of a such and such quality. Often to do this you will be referred to an After Loss Adjuster who has never seen it either!
Try this simple exercise: Take yours, or your wife’s diamond engagement ring off her finger and hold it hidden in the palm of your hand. Now have the person describe the ring. What style is it, what metal is the ring made of, what carat are the diamonds and what grade are they? If you cannot answer those questions accurately, how will you be able to explain to an After Loss Adjuster and give them enough accurate information to enable the Insurer to adequately compensate you for your loss. Take the ring mount (the precious metal part) for example. How a ring is made can vary over several hundred dollars alone. The size and quality grades of a diamond can also cause large variances in the gems value, so unless you have independent proof, you are unlikely to be adequately compensated when you make your claim.
As an example, your 0.25ct diamond ring cost $2800, so you feel there is no need to pay to have it appraised. But, be aware, in the event of a claim, it is up to you to prove that you actually had the ring you are claiming for. What will you do? Maybe you have a photograph of yourself wearing the ring , or even better, a sales receipt from when you purchased it. You contact your Insurers Claim Department, and they have the claim assessed by one of their own appointed ‘Loss Adjusters’, who deals directly with you.
WE NOW ENTER THE FANTASY REALM OF ESTIMATE AFTER LOSS.
The after loss adjuster, has to try and imagine, from your description of the article, what the item may have looked like, what the grades on the diamond might have been, what the gold quality was, (and any other precious metals were) etc. It is AGL’s, and other knowledgeable appraiser’s opinion, that not even the most experienced appraiser, can to any degree of accuracy, estimate the quality of a piece, or calculate a figure, which may or may not, fairly compensate you, as they are not in possession of sufficient factual knowledge, to formulate an accurate value.
So how do they handle it? Generally the After Loss Adjuster will use the lowest ‘average price’.
So if you can’t prove the diamond in your ring was a 0.25ct ‘VS1’ clarity and ‘F’ colour of ‘Very good’ cut grade, you may end up with possibly a 0.25ct diamond ‘I’ colour, ‘SI1’ clarity, and of ‘Medium’ Cut grade, because that could be considered, an ‘average’ grade, and you have no proof it is better. If a cash payment is considered, you won’t receive a cheque for the value of your original ring, you may receive a payout of the ‘ACV’, or (Actual Cash Value) of the ring as they see it! In this case, they can probably replace the item through their ‘replacement agent’ for a considerable reduction off a normal ‘Retail’. That is what you would receive (less any excess deducted) should you chose to take the cash. The other option would be to take the lower quality diamond offered.
NEITHER OPTION IS PARTICULARLY SATISFACTORY IS IT?
To explain how your claim may be settled: An Insurance company can usually buy the item at a reduced figure, lower than retail, through their ‘Replacement Agents’, often jewellers who, due to the volume handled for an Insurer, are prepared to work at a discounted rate. In short, the insurer will either replace it for you, or give you a cash-out figure, based on their actual cash value (ACV, or the insurer’s cost to indemnify, or make you whole again) less any deductibles such as ‘policy excess’.
BOTH ARE A COMMON METHOD OF CLAIM SETTLEMENT.
This example is to demonstrate how essential it is to have your jewellery professionally appraised, before a problem occurs, and, not just by any so called ‘appraiser’, but a qualified, fully equipped, professional appraiser, who will prepare it to a standard that will assist in Indemnifying you, based on the accuracy of your Pre-loss Appraisal. Then in the event of a loss, you may be fully indemnified, and receive an item of the same quality, and if a diamond, the same size and grades that you originally had.
Remember, it is irrelevant what the insurance company pays a Jeweller to achieve this, the outcome is the important goal. You are insured for an item of certain quality, not price, The $ value on the appraisal is really only important at the time of Insurance to calculate a policy fee.
The main reason a piece of jewellery is appraised and insured, is for ‘peace of mind’, in case of the unexpected. Usually when you have to make an Insurance claim, you are already in a stressful situation. Then you have to deal with an appointed ‘after loss adjuster’, this is where things can become bogged down and messy. Usually – claim adjusters are employed, and are paid by an Insurance Company, so if there is any doubt, and little or no proof, the result will by nature, swing in favour of the Insurance Company.
This is why a full, independent appraisal from a qualified appraiser such as AGL, or one who is a member of Jewellery Appraisal Society of New Zealand, is so important. Don’t leave it until a loss occurs.