Why an appraisal?
As a consumer, the first question to ask yourself when requesting an appraisal on a piece of jewelry is what is the reason for the appraisal. The reasons vary, but the most common reason is “the insurance company needs it”. Aside from written insurance replacement appraisals, the following is a list of other types of appraisal services Vintage Jewelers and Gifts offers, in order of the most common types:
Insurance Replacement Value-
These are the appraisals that we are most often called upon to do. These valuations
provide a comprehensive written description of all pertinent information to allow for the replacement or duplication of an item in the event of loss, for an item of equal value. When asked about this appraisal, we encourage the client to have a clear understanding of what their insurance carrier can provide and the steps taken should a loss occur.
A verbal appraisal is for personal information only and is not for insurance or other legally binding purposes. It’s not an appraisal, just an estimated valuation based on limited examination within an immediate time frame.
Fair Market Value-
Used frequently for estate appraisals, the goal of a FMV appraisal is to provide values that are fair to all concerned…these can be inheritance valuations for tax or probate purposes, the values for division of the jewelry to different members of a family or valuations for the sale of the property. Fair Market Valuations represent values of items in their present condition and NOT replacement value.
This appraisal is done for items that were lost or stolen in which the items were not documented or poorly documented. The appraiser establishes valuations based on descriptions provided by the client and any other information the client can provide.,i.e. pictures, similar items from a catalog, etc. These appraisals sometimes are grouped as “hypothetical estimates to replace”.
The appraisal is performed for a party wishing to use jewelry or gemstones for obtaining a loan or a similar business transaction…usually based on FMV, a copy provided for the third party. This appraisal can vary from FMV in case time is of the essence, which is not the case in an FMV appraisal.
This type of report can support a insurance claim for a replacement stone (eg.) if a stone suffers damage. The insurer will usually mitigate their loss by keeping the damaged stone.
This report provided to the donor is to allow tax relief for the donor…these reports are based on Fair Market Value and NOT insurance replacement value.
This report does not offer a valuation, merely confirms identity and descriptions of gemstones, precious metals, coins, etc. In the jewelry industry, we most often provide these as stone reports provided by the Gemological Institute of America (GIA)
There are additional reasons for written appraisals but the foregoing are the most popular and the ones we are most often asked to perform.