Are you truly protected?
By Charles M. Ellias, G.G.
Inalienable rights A.K.A. fundamental rights of United States citizens include the right to practice religion, equal protection under the law and the freedom of speech. Appraising on the other hand, is not an inalienable right, but is far too often treated as such by the jewelry industry today.
Working within the jewelry industry, by buying and selling jewelry or even being a Bench Jeweler or Graduate Gemologist, does not qualify one as an appraiser. Appraising is a profession, just as a doctor, lawyer, or CPA, where one must be educated, tested and qualified. Unfortunately, as of today, there is no overseeing body to administer government testing and licensing, therefore, anyone can hold themselves out as an appraiser.
A professional appraiser will have a high level of education backed with a high level of experience and product knowledge. They will have taken and passed courses and prescribed examinations in product knowledge, evaluation and valuation, principles and business practices, appraisal ethics, standards and report writing, along with submitting sample reports for professional appraisal review. This type of professional will also keep up with the standards and changes through rigorous continuing education.
While there are many types of jewelry appraisals (e.g. Estate, Dissolution of Marriage, Equitable Distribution and Marketable Value), for this article, focus will only be on the most common type issued today, Insurance.
The first step – and the most critical – is qualifying the appraiser. Almost exclusively, the only question that is asked when trying to obtain an appraisal is, “How much do you charge?” The most important question that you should ask is, “What qualifies you to appraise my property?”
The most simplistic way for you to vet an appraiser is to ask for a copy of their Curriculum Vitae (CV). The CV will contain all of their education, course certifications, published articles and books, organizational membership levels, positions, designations, awards and honors. Note: Every qualified appraiser has one and will be more than happy to share it with you. If they do not know what a CV is or do not have one, it should be treated as an instant disqualification. Remember, what you are paying for is an opinion and it is crucial to make sure it is a qualified opinion.
The second step is to ask for a list of all the gemological equipment at the appraiser’s disposal to conduct the assignment properly, as one cannot competently or accurately appraise without the proper tools. This, at a minimum, must include a proper gemological binocular microscope with darkfield,overhead, and fiberoptic illumination; a master diamond color-grading set; proper lighting set-up for color grading; a proper-colored gemstone color communication system; a LW/SW ultraviolet light cabinet; a polariscope; refractometer; spectroscope; accurate electronic weight balance; metal testing equipment; accurate measuring devices (e.g. micrometer, gem gauge), along with a full reference library.
The third step is to ask to see a sample appraisal done on the same type of item that you need appraised. While there are far too many factors to list in this article, the basics are as follows:
- Cover Documents: This will contain the name of the property owner, the valuation dates, the type of appraisal report and its assigned use, markets and market levels in which the appraisal was conducted, grading systems and scales used and explained, definitions of value used and explained, what report writing standards the appraiser conforms to, as well as any limiting conditions and critical assumptions.
- Appraisal Body: With Insurance Appraisals specifically, it is absolutely critical this is done in full narrative detail, as this is what the insurer will base their replacement or settlement offer on in the time of a casualty, not the value conclusion! The body must contain a full description of the item including but not limited to:
- The metal purity (e.g. 14kt., 925, 950)
- The metal type
- The metal color
- The physical measurements of the item including the physical in length (inches) components of the item (millimeters), finger sizes, and weight (e.g. 3.65 grams). Gross weight includes non-precious metal parts such as gemstones or net weight of precious metal parts only.
- Large diamonds (over ½ carat) should have a full laboratory grading report that addresses not only the shape, carat weight, full measurements, color and clarity but also UV fluorescence, critical angles and measurements, enhancements, proportions and finish, as well as a plotting diagram.
- Small accent diamonds should have not only shape, the number of diamonds, the total carat weight, the color and clarity but also the individual measurements.
- Colored gemstones must include the type, weight, physical measurements and cutting style, clarity (transparency where applicable), color (using a recognized color communication system) phenomena (e.g. Cats Eye, Color Change) where applicable, and cut grading. Enhancement and origin must be addressed where applicable and significant gemstones should also have a full laboratory grading report.
- The body must also contain photographs with enough detail to identify the item, the item age (circa), the condition, and any pertinent information that could affect the value or condition such as conservation or provenance (historically important information, e.g. an award-winning brooch or a ring owned by a famous person.)
I cannot stress enough how critical it is to have a properly conducted appraisal. Insurance companies base settlement on the quality and content of the appraisal body and the qualifications of its author. The value of an item is assessed at the time of casualty and not the time of policy issuance! This is all based on contractual law, which, if you disagree with, you must follow all agreed policies to challenge and can cost you thousands of dollars to fight. Having a properly conducted appraisal done by a competent and qualified appraiser is what will protect you from over-paying insurance premiums on inflated values, along with saving you from losing hundreds to thousands of dollars on claim settlement amounts that will not allow for proper replacement.
Appraisal fees charged by a trained qualified appraiser will be based on the time, work, and testing involved to properly conduct the assignment. A proper appraisal will never be based on a flat rate (e.g. $50 per item) as each item involves different levels of testing, time and work. The best way to assess if your current appraisals will properly protect you in the case of an insurance casualty (the reason you are paying for insurance) is to have an appraisal review done by a qualified appraisal review expert.
Charles M. Ellias is a 30-year jewelry industry professional. Mr. Ellias is an expert witness for the jewelry, legal and insurance professions; an industry lecturer, writer and trainer, and currently serves as the store manager of Weinstein Jewelers of Novi. Mr. Ellias has served on numerous boards and committees of professional appraisal and jewelry organizations.