What is a Qualified Appraisal?

(Part Three of a Three Part Series)

                                                                              

An Appraisal is an UNBIASED Opinion of Value

Your appraisal should be an unbiased opinion of value for a particular market on a particular date prepared by a qualified independent professional.  An appraiser is a skilled professional with expertise in both the subject matter being appraised as well as thorough training in valuation science, appraisal report writing, USPAP compliance and experience with the market place for the item in question.  Your appraiser should be an expert and have the credentials to prove it.

If the appraiser buys, sells, brokers, works for (or with) a business that deals in jewelry, coins, or watches their appraisal valuations can be considered tainted.  A "free appraisal" from the store where you purchased your item is nothing more than "documentation of purchase" and commonly have inflated values.  This is nothing more than a marketing tool. 

An “Estimate to Replace” or an “Insurance Document” is not the same as an appraisal.  Although it may be accepted by the insurance agent; in the case of a claim, it may be rejected by the insurance company for failing to meet the minimum standards of an appraisal.

Your appraisal should be in document format, describing all qualitative and quantitative attributes necessary to arrive at the value conclusion.  Single page appraisals frequently lack critical information needed by your insurance company should you make a claim.  If you submit an appraisal to the insurance company in which either the grades or values are knowingly inflated or intentionally misleading; you may be guilty of fraud or conspiracy to commit fraud and may be prosecuted or have your claim denied.  Remember your policy is a legal document!

Your Appraisal Should be USPAP Compliant 

Your appraisal should be USPAP compliant.  USPAP (Uniform Standards of Professional Appraisal Practice) is a set of standards that were created in response to the Savings & Loan crash of the early 1980’s designed to prevent potential appraisal abuse in future real estate transactions. The standards were expanded to include personal property appraisal practices.  In any litigation situation, a USPAP compliant appraisal assures the user their appraisal has been written to the current state of appraisal report writing standards. It is one measure of the level of professionalism to which the appraiser subscribes.

Your Appraisal Should Be Professionally Prepared

Insurance companies often receive valuations on one-page preprinted paper entitled “Appraisal” containing descriptions such as “Diamond solitaire ring in 14kt gold” and then a value.  With the aid of computer software programs, today many appraisals are being produced “while-you-wait” in 15 minutes or less, some including a single picture of your appraised item, and valuations based on software programming, not market research.  Proper attention to detail, due diligence, market research and analysis are cornerstones to producing credible appraisal reports, not canned software programs or values based on the appraiser’s longevity in the business.

Your appraisal should:

·         Be typed.

·         Describe the type of report, the intended use and intended users of the report.

·         Inform the reader of the location where the inspection was performed, the date of inspection and the valuation date(s).

·         Include definitions of value, market selection, approach to value, and value conclusion considerations.

·         The methodology used in the grading of the items.

·         Contain a Privacy Notice.

·         Contain a signed Certification of Appraisal Practice.

·         Contain a detailed description of the item, including the gram weight of the item, any marks on the item such as makers mark, hallmarks, karat stamps, engravings, and any other relevant comments.

·         Contain detailed descriptions of any gemstones including their type, style of cut, dimensions of the gemstones, carat weight, color grading, clarity grading, treatments, and cut grade.

·         Detail any tests performed on the metals.

·         Detail the method of manufacture and quality of workmanship.

·         Contain an assessment of the condition of the jewelry, coins, and watches.

·         A listing of the references used in the valuation analysis.

·         The qualifications of the appraiser.

·         A list of the equipment used in the appraisal.

·         A list of pertinent definitions.

Your Appraisal Should Contain Numerous Photographs

As the saying goes, “A Picture is worth a thousand words”.  Jewelry, coins and watches can be difficult to photograph properly.  A professional appraiser should have the proper equipment to photograph your items from different angles and provide sufficient pictures of the appraised piece to afford the intended users of the report adequate information to understand the item and its condition.  The appraiser should also be able to provide enlarged, microscopic detailed photographs of noteworthy points where appropriate.

Is it to my Advantage to Have the Value on my Appraisal Higher than What I Paid for the Item?

In a word, NO!  Inflating the value on your appraisal simply means you will pay higher insurance premiums.  People think an inflated value means the insurance company will write a bigger check in case the item is lost or stolen.  Insurance companies research each claim before they settle claims, and will not pay more than the replacement value of the item.  Additionally, many insurance companies now replace the insured item instead of issuing a check.  And finally, if the insurance company can show the appraisal was intentionally written for an inflated amount, it can void your claim.  At the very least, an appraisal with an inflated dollar value means you will needlessly pay larger premiums.

How Often Should I Update My Appraisal?

 

The value of your possessions can change over time, just like the value of your home.  Most insurance companies advise you to have a new appraisal done every 3 – 5 years and update your policy when the value of the items changes to ensure adequate coverage.  Ask your insurance agent how often the insurance company requires an updated appraisal. 

 

Remember, prices go up and down with the economy, market conditions, and style trends.  An appraisal more than two or three years old may be of little relevance in today’s market.  If the precious metals market has significantly changed from when you had your appraisal done, it may be a good idea to have these items reappraised as their values may have significantly changed.

 

www.negemappraisals.com

(781) 729-0506 or (207) 604-4423

New England Gem Appraisals specializes in the appraising of fine jewelry, diamonds, gemstones, coins, watches and silver flatware.  Qualified independent appraisers serving the Boston area, greater Massachusetts, New Hampshire, Maine, Rhode Island, Connecticut and Vermont. 

Beth Doughty holds the titles of a Graduate Gemologist (GIA); Master Gemologist Appraiser®, Senior Accredited Appraiser with the American Society of Appraisers; and Certified Master Appraiser with the National Association of Jewelry Appraisers.

Steve Doughty is one of a very few qualified appraisers whose practice is solely appraising rare coins and watches.  Steve has been conferred the prestigious title of Numismatic Scholar from the American Numismatic Association's Florence School of Numismatics.  He is a member of the American Numismatic Association, the National Association of Watch and Clock Collectors, and the National Association of Jewelry Appraisers.

                                  Credentials to Look for in a Jewelry, Diamond,

Coin or Watch Appraiser

 

(Part Two of a Three Part Series)

 

                                                   

Anybody can be a personal property appraiser.  It is an unregulated industry.  For your protection an appraisal needs to be done by an independent, certified/accredited, professionally trained expert, not just somebody who says they appraise jewelry, works or owns a jewelry store, a diamond or auction house, a coin shop or watch dealer.

Look for an Accredited/Certified Independent Professional Appraiser

Your appraiser should be an expert and have the credentials to prove it.   An appraiser is a skilled professional with expertise in both the subject matter being appraised as well as thorough training in appraisal theory and methodology, ethics, market research, valuation, appraisal report writing, and ongoing continuing education courses. 

·         A diamond or jewelry appraiser needs to have gemological training.  In the United States, a Graduate Gemologist (GG) diploma earned from the Gemological Institute of America (GIA) is the most common.  In Great Britain, the designation is a Fellow of The Gemmological Association of Great Britain (FGA). 

 

Do not confuse a graduate gemologist (GG) with an appraiser.  In a nutshell, GIA does not offer courses in appraisals[1].   GIA provides training in gem identification, diamond grading and colored gemstone grading of loose gemstones.  GIA does not offer training in jewelry manufacturing techniques, appraisal theory and methodology, market research, ethics, valuation science, the Uniform Standards of Professional Appraisal Practice (USPAP) compliance or appraisal report writing. Only specific appraisal organization designations can provide any assurance of an appraiser’s qualifications.

 

·         A coin appraiser should have formal training in numismatics.  A coin appraiser should have a Numismatics Scholar diploma issued from the American Numismatic Association’s Florence School of Numismatics as well as ongoing ANA membership. A watch appraiser should have years of experience in appraising watches, be a member of the National Association of Watch and Clock Collectors as well as taking ongoing continuing education courses.

 

·         Look for a certified or accredited jewelry appraiser from a nationally recognized appraisal association such as the American Society of Appraisers (ASA), the International Society of Appraisers (ISA), or the National Association of Jewelry Appraisers (NAJA).  Look for certified or accredited members in these associations.  Certified or accredited members are required to have years of experience, undertake continuing education, pass rigorous examinations including peer review and undergo periodic reaccreditation review in order to maintain their accreditation status.  Additionally, these associations require their appraisers comply with the Uniform Standards of Professional Appraisal Practice (USPAP).  A USPAP compliant appraisal is your assurance your appraisal is written to the highest standards in the industry.

 

·         Be Wary of Inflated Titles and Improper Claims of Appraisal Certifications.  There are many organizations offering individuals impressive sounding titles such as The Diamond Council’s “Certified Diamontologist”[2] and The Jewelers of America’s “Professional Certification”[3].  These certifications are designed for retail jewelers to enhance their abilities to sell diamonds and jewelry and have nothing at all to do with appraising jewelry, coins or watches.   These organizations do not provide nationally recognized certification or accreditation appraisal designations. 

In our next blog, we will look at what a qualified appraisal is.

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[1] www.gia.edu/gia-faq-education-programs-courses-appraisal

[2] www.diamondcouncil.org

[3] www.jewelers.org/about/about-ja

Should I Have Jewelry, Coins and Watches Appraised for Insurance?

 

(A Three Part Series)

 There is a special feeling when one receives a new piece of jewelry, obtains a rare coin, or becomes the proud possessor of a luxurious watch.  The beauty, the sparkle, and the euphoric feeling you get can be magical.  The last thing we think about is what could happen to it.  Jewelry, rare coins and watches are often delicate, relatively small, and can be easily damaged, lost or stolen.  That’s why we insure these precious items to make sure if something happens we can have them repaired or replaced.  When we call our insurance agent to discuss insuring these items we are informed they need to be appraised by a certified appraiser to determine their replacement value before the insurance company will insure it.  Appraisals cost money and take time, so when is it worth having these items appraised?

 

 What Items Should I Have Appraised for Insurance?

Insure any jewelry, coins or watches that are valuable to you.  “Valuable” can be in dollars and cents.  It can also mean emotional value.  Emotionally valuable items can be wedding rings, sentimental items, family heirlooms, and custom-made “one of a kind” pieces.  Properly insured you can have them repaired or replaced if something happens to them.

Another way to consider what pieces to insure is to consider how much money it would take to replace it?  If lost, stolen or damaged could you easily replace or repair it with out-of-pocket money?  A $150 pendant purchased from a department store is often easier to replace or repair than a $10,000 custom piece of jewelry or gold watch purchased from a jewelry store. 

Knowing how much personal property insurance coverage you have under your standard (or blanket) policy is a good starting point.  Homeowners and renters insurance policies usually include coverage for household and personal items including jewelry.  Generally, most policies limit the dollar amount for theft of valuable personal possessions such as jewelry, watches, coins, and silver flatware.  The maximum amount of coverage for these items is commonly $500 to $2,000 per item, with a $5,000 to $10,000 maximum per occurrence*.

 

With today’s average price of a diamond engagement ring around $5,000, most blanket insurance policies do not cover the full value of the ring.  Some blanket insurance policies do not provide insurance coverage if it is lost or stolen, so you may need additional coverage to insure the full cost should you ever need to replace the ring.*  This is called scheduling the property. Insurance companies often refer these additional policies as “Riders” or “Floaters”.  For high dollar valued items such as diamond rings, rare coins, luxury watches and sterling flatware, the item is on a “schedule” and separately insured – not covered under the general personal property limits.

Insurance companies usually require highly valued items to be appraised to make sure the items are being insured at their correct replacement value.  But not all appraisals or appraisers are equal.  The personal property appraisal field is an unregulated industry.  Anybody can be a jewelry, coin or watch appraiser with absolutely no credentials or appraisal expertise.  Often the store you purchased the jewelry, watch or coin from will provide you with a “free appraisal”.  But is it any good?  Does it really protect you?  

In part two of this series, we will discuss what credentials to look for in a jewelry, diamond, coin or watch appraiser.

 

 

*Insurance coverage differs from one insurance company to another, and most insurance companies offer multiple policy plans.  We recommend you check with your insurance agent to determine the amount of coverage you have with your current insurance policy.