Diamond Articles

The Reality of Insurance Appraisals

May 25, 2016 - Diamond Articles
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Many of our customers have an insurance appraisal for their diamond, watch or jewelry that they are looking to sell. While these are useful when it comes to insuring your items, they are not as useful when it comes to establishing their second hand value. Unfortunately, the price stated on these can be misleading and create false expectations.

Why is the price on my insurance appraisal not the resale value?

Appraisals are meant solely for insurance purposes. It covers the cost of replacement in the event that something should happen to your item. But it’s important to bear in mind that these are inflated values that do not reflect resale value of your goods for the following reasons:

  • Insurance values are higher than retail value (up to 100% above retail)
  • Second hand values typically range from 20%-50% of retail value

It simply does not add up. The reason insurance appraisals are inflated is that it allows insurance companies to charge high insurance premiums for items that have much lower replacements values. It is important to note that replacements are not at 100% of insurance value. Jewelers also benefit as they can use this as a selling point: high insurance values reassure buyers that they are getting a great deal.

Moreover, even if the stated price had been accurate at the time it was issued, the diamond, jewelry and luxury watch markets fluctuate over time. Fixing a price on these items is an impossible task as they are dependent on demand and as such do not have set values. The price at one point in time does not mean that it will have that same value the following week, month or year.

Infographic - Sample Insurance Appraisal Breakdown[4]

Why grading’s on insurance appraisals are unreliable

When it comes to diamonds, the grading’s detailed on an insurance appraisal are issued by a jeweler and not by a laboratory such as the GIA or AGS. Jewelers do not apply the same grading standards as a laboratory, they have less of a scientific approach and typically give a range of color and clarity grades (i.e. G-I color). Jeweler issued appraisals are notoriously variable and not audited by any third party. As such, these grading’s cannot be considered accurate but should instead be treated as a guide.

It is a similar story for luxury watches, as the jeweler issuing the information on the insurance appraisals may not be a watch expert and not know the intricacies of the second hand watch market. There may since have been damage to the watch affecting its resale price. As a result, any information on the insurance appraisal is not necessarily to be treated as accurate but rather, one jewelers opinion.

What is the most reliable paperwork for my diamond?

When it comes to selling, the reality is that:

  • Any form of paperwork is helpful in establishing the characteristics of your item
  • None will be able to provide you with the resale value of your item

They list the core information needed for an expert to establish a price range without seeing it in person. Some types of paperwork are more useful than others as they include either more information or more accurate information.

The most dependable source of information for any diamond is a GIA certificate. The most respected laboratory in the industry, the GIA (Gemological Institute of America) provides trustworthy, detailed and accurate certificates.


How can I find the true value of my item?

Simply put, the only sure way to determine the second hand value of your items based on today’s market prices is to consult an expert. Either by scheduling an appointment or by sending your item in for valuation. To first get a rough idea of price, fill out our online form and our experts will be able to give you an initial price range. WP Diamonds works with customers across the US, from Boston to San Francisco. We also buy diamonds, jewelry and watches from international customers.

While an insurance appraisal is useful in that it provides some insight into the characteristics of the piece, it does not reflect the true second hand value of your item. There are no set second hand values. Being aware that the price stated on your insurance appraisal is not what you should expect to receive is important when looking to sell your items.

Bio: Written by one of our diamond, designer jewelry or luxury watch experts. With over 150 years of combined experience, our experts are able to comment on trends, share industry knowledge and provide diamond, designer jewelry and luxury watch education.

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