Elements of Value
Appraisers should describe a jewel's tangible and intangible value
elements completely. Then if the piece is lost, the owner can obtain a true
replacement from the insurer
BY AL GILBERTSON
A jewelry appraisal is often called a valuation, indicating the piece
has elements that create value. While the bottom line of an appraisal may
be a number with a dollar sign, it's incomplete without listing and explaining
the elements that create the value.
Insurance companies will use the appraisal to determine how to replace
lost or damaged jewelry. But insurers word their policies carefully to protect
themselves against excessive claims.
One of the most common phrases in a policy deals with how an item will
be replaced if it's lost, stolen or damaged. Example: "Payment will
not exceed the amount necessary to repair or replace the damaged item(s)
with property of like kind and quality, or the amount of insurance, whichever
is less" (see facing page for a full explanation of this statement).
An appraiser and anyone else who provides a document used to obtain
insurance should pay careful attention to this statement.
Make Descriptions Complete
If you describe a ring merely as 14k yellow gold and 12.5 grams in an appraisal
report, the insurer can procure any 14k ring that weighs 12.5 grams. But
if you state the ring has the copyright of a prominent designer or name
in the industry, the insurer is obligated to replace it with an item of
"like kind and quality," which means the same designer, unless
the client agrees to accept a lesser item or an item by a different maker.
Consider this example: A jeweler in Oregon wrote an appraisal for a diamond
with a serial number and the logo of a prominent diamond cutting firm laser-inscribed
on the girdle. The appraisal said the diamond was G color, VS1 clarity and
Ideal cut, but didn't mention the laser inscription. When the ring was stolen,
the insurer replaced it with an Ideal cut that met the standards described
in the appraisal but wasn't the same price as the original. The customer
appealed to the state insurance division but was turned down because the
appraisal didn't indicate the laser inscription. The insurer was obligated
to replace only what the appraisal described.
Define Value Elements
Here are some detailed elements of value in common jewelry components:
- Recognized color system description (such as Gem Dialogue or Gemset).
- Specific clarity descriptions.
- Cut quality description.
- Millimeter measurements and weight (estimated or known) of major gems.
- Clear description of quality of any phenomena (such as cat's eye).
- Discussion of probable treatments.
- Identification by measurements when over 0.25 carat (you may choose
another size). Note any "brand" inscriptions on the diamond itself.
- Cut quality by a recognized system (such as American Gem Society).
- Color and clarity. Describe the system used if using Gemological
Institute of America terminology, for example, don't state an actual GIA
color or clarity grade unless GIA has in fact graded it. Instead indicate
the diamond is an "approximate GIA color and clarity grade."
Clarify how you determined color such as by use of a GIA cubic zirconia
master set or GIA master set of three diamonds, F, H and K.
- Identification of any treatment.
- Weight, estimated weight or both when appropriate.
- Metal, color and quality (fineness).
- Style, period (circadating or period style Retro, for
- Measurements and weight.
- Method of manufacture (mass manufacture, die-struck, cast, handmade).
- Identifying marks (stamp, trademark, serial numbers, model numbers).
- Apparent repairs, past or needed.
Include any limitations as to how the item might be replaced:
- Discontinued models that might be replaced by a comparable model.
- Antique or period jewelry that can't be replaced with identical items.
If you feel the insurer may compete with you by buying a replacement from
another source with access to the same designer, you might try the approach
of one jeweler who states on the appraisal report: "A copyright item
is indicated by a registry # and assures you of replacement with an identical
or similar item. The item is a copyright design and if insurance replacement
necessitates a 'like kind and quality' replacement, only replacement with
the same copyright design is acceptable. Unauthorized reproduction of this
item will result in prosecution under copyright law." Note the registry
number on the brief description of the item. Include a moderate description
to justify the value for the insurer.
One catch suppose the item is stolen and recovered. Can police
identify the item from your description on file with this registry number?
Make sure your registry records have all critical details (elements of value)
for adequate ID even if they're not all on the appraisal.
Insurers have certain procedures for settling losses. Appraisers should
note that actual cash value policies promise only to replace an item of
jewelry with "property of like kind or value." If an appraisal
is vague, your client could end up with an inferior item because the insurer
determined replacement without all the facts. Here's how one "actual
cash value" policy reads (in part):
"Loss or damage to covered personal property will be settled on
an actual cash value basis. This means there may be a deduction for depreciation.
Payment will not exceed the amount necessary to repair or replace the damaged
item(s) with property of like kind and quality, or the amount of insurance,
whichever is less."
Under "agreed value" policies, insurers are obligated to pay
the amount for which the jewelry was insured. The verbiage typically states:
"If the itemized article is destroyed or lost, we will pay the amount
of coverage for the article ... If the itemized article is partially lost
or damaged, we will pay to restore the item to its condition just before
the loss or make up the difference between the market value before and after
Al Gilbertson owns Gem Profiles, an appraisal service in the Pacific
Northwest. A member of the American Gem Society and the International Society
of Appraisers, he was also a member of the Jewelers Vigilance Committee's
Appraisal Task Force, the Gemological Advisory Committee of the AGS Gem
Lab and the AGS Appraisal Committee. He is a fellow of the AGS Jewelers
Education Foundation, director of research for the Diamond Profile Laboratory
and editorial adviser toThe Guide, published by Gemworld International.
Copyright © 1999 by Bond Communications.