Types of Appraisals
An appraisal is the process in which an accredited professional examines and assesses an item based on its relative quality and then assignes a dollar-value to it. There are many reasons why someone might need an appraisal. These include insurance documents, point of sale documents, donation appraisals, and estate appraisals. The majority of appraisals done today are for insurance replacement (retail replacement). This policy protects for the most risks and allows the item to be replaces with a similar item of jewelry. The other type of coverage is the agreed value policy. This is where thr settlement is for cash and not for replacement of the jewelry. An insurance appraisal is required when an item of jewelry is to be schedules seperately on an insurance policy. With just standard coverage this might include some added allowance for jewelry. However, these limits are generally low and may not cover all risks. Having a seperate insurance rider on any single item of jewelry generally cover the risks of mysterious disapperance, theft, loss, etc. You should refer to the actual policy for explanation of coverage.
A point of sale document is similar to an insurance document in that a retail value is provided so that the client can purchase insurance. However, this document may be provided by the actual seller of the item of jewelry and it will report the actual selling price. In this type of appraisal, the seller is disclosing his/her role in the transaction. This type of document is valid and is usually acceptable for obtaining insurance.
Other Types of Appraisals
When an item of jewelry is being donated to any charitable organization, an appraisal may be required. The value to be used for tax reporting is most commonly the fair market value. This is defined as the price that a willing buyer and willing seller would agree upon.
An example of fair market value might be the price that an item sells for at a local auction. Rarely is this price a full retail price. Depending on the condition of the item and the desirability of the item, the fair market value might be as low as “scrap” value or rarely, as high as retail value.
Fair Market value appraisals
When an item of jewelry is being donated to any charitable organization, an apprasial may be required. The price that a willing buyer and seller agree upon when neither is compelled by time or need to buy or sell is commonly known as the fair market value. An expample would be the price that an item sells for at a local auction. Fair market value must represennt the item’s value in its current condition. Depending of this condition of the item and desirability, the value might be as low as “scrap” value or rarely, as high as retail value.
Immediate liquidation value appraisals usually reflect low values because of the situations that create their need. Sitations like divorce settlements and other 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 loam collateral appraisals.
Why an Appraisal?
So why would you need an appraisal to begin with? Most insurance companies require one before they issue a policy, you might need one for tax purposes, or maybe you’ve always wondered what that old family heirloom of yours is worth.
The good news? The price of precious metals is always changing, and there’s a good chance that your jewelry has appreciated in value over time.
When to Get an Appraisal
A Certified Jewelry Appraiser can give you a fair and accurate appraisal for:
• Insurance to cover loss, damage or theft
• Estate tax evaluation
• Value comparison
• Dissolution of marriage (divorce)
Metal prices can fluctuate quite dramatically, so we recommend getting your jewelry appraised every three to five years, either to update your insurance policy, so you don’t get burned in case of a loss, or just to get a measurement on your investment.