What is a Jewelry Appraisal?

An appraisal is a document that describes an item, assesses its relative quality and assigns a value to it. Descriptions usually cover the visible, measurable and analyzable facts about the item (weight, materials, markings). Most jewelry appraisals also describe subjective features such as gemstone quality, relative rarity and overall quality of manufacture. 

Jewelry appraisals should not be confused with diamond or gemstone grading reports. Learn about Grading Reports >

Jewelry Appraisals for Insurance

The majority of appraisals done today are for insurance replacement (retail replacement) purposes. The point of insurance is to return the value of the item. Therefore, insurance appraisals should reflect the realistic cost of replacing an item in a jewelry store that regularly sells the type of item being appraised. See our guide to Jewelry Insurance >

Most experienced retail jewelers with basic formal appraisal training are qualified to write insurance replacement appraisals on the new merchandise they sell in their stores. They may also be qualified to write insurance appraisals on new jewelry they do not sell, if the jewelry is similar to the products in their store. Appraisals done on other types of jewelry or for other purposes require more advanced appraisal training. 

Expertise

Look for on-site expert gemologists and appraisers that will identify your gemstones and determine values for insurance purposes, estate tax evaluation, value comparison and more.

Types of Appraisals 

Fair market value appraisals 

Reflect an actual selling price between a willing buyer and seller, when neither is compelled by time or need to buy or sell in the item’s most common market. Fair market value must represent the item’s value in its current (used) condition. Fair market value is generally required for charitable donations and estate appraisals. Fair market values may run lower than retail replacement values, because replacement values often reflect the cost to replace a used item with a new equivalent.

Immediate liquidation value appraisals 

Usually reflect low values because of the situations that create their need. Divorce settlements and some types of estate liquidations may require this type of appraisal, depending upon the jurisdiction where the scenario takes place. Less common types of appraisals include probate and loan collateral appraisals.

The Legal Guidelines

Intentionally over-valuing items on appraisals is considered illegal under Federal Trade Commission (FTC) guidelines and unethical by all nationally recognized appraisal organizations. The value assigned to the piece of jewelry should not be inflated beyond what is considered a fair retail selling price. 

There are currently no U.S. laws or regulations that set educational standards or require certifications to become a jewelry appraiser. However, there are industry standards for appraising.

Customers’ appraisals should be updated periodically to make sure they have adequate insurance coverage. Unusual circumstances, such as sharp increases in availability and price for certain jewelry components, should also be taken into account when appraising an item. In addition to the cost to replace or repair an item, the value stated in an insurance appraisal should include enough to pay the appraiser for their services. The appraiser must also remember to add taxes, which can either be listed separately from, or included in, the value on the appraisal. 

Some insurance companies have arrangements with jewelers for insurance replacement business. When a consumer has a loss, their insurance company requires that they go to a specific jeweler for a replacement. The jeweler is then paid an amount from the insurance company that is less than retail, and perhaps less than the appraisal, but the customer gets a piece comparable to the one they lost, and the jeweler gets the business from the insurance referral. 

How to Find a Trustworthy Jewelry Appraiser

Appraisal Credentials: A professional jewelry appraiser should be certified or titled by a respected national appraisal organization, like the National Association of Jewelry Appraisers. Different types of appraisals require varying levels of training.

Gemological Credentials: With no federal or state requirements for appraisers, it is crucial to ask for credentials. A Graduate Gemologist diploma from the GIA or its equivalent should be considered minimum gemological training.

Knowledge of Jewelry Manufacture: A qualified jewelry appraiser must understand manufacturing techniques and recognize their contributions to the value of an item.

Continuing Education: Continuing education certificates and credentials help ensure that the appraiser is knowledgeable about the latest gemological and appraisal issues.

Jewelry and Appraisal Experience: A broad range of jewelry experience over many years often leads to a more knowledgeable appraiser. Likewise, solid experience in the appraisal industry is equally important.

High Ethical Standards and Awareness of Legal Obligations: Appraisers should adhere to the highest levels of professional behavior. Consider the appraiser’s professional affiliations, as well as the appraiser’s reputation within the industry. Ideally, work with a jewelry appraiser associated with Jewelers of America, our members commit annually to the highest ethical standards.

Jewelers Mutual Insurance Company and Geolat and Associates, Inc. contributed information to this article. 

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