Jewelry Appraisals, what am I missing?

[gtaylor]

For the record, I believe that St. Maarten is the very best place on the planet to buy quality jewelry.

 

When you get home and get an appraisal for twice the price that you paid, and you're so pleased, then you add that piece to your insurance policy on a rider, the added premium HAS TO be based on the appraised price.

 

But you KNOW that you could replace that piece for the price that you originally paid in St. Maarten, or perhaps less.

 

 

Why insure a purchased $10,000 piece at a $20,000 appraisal price?

 

IMWTK

 

Gary

[kal]

Gary - The reason you need to maintain insurance at the appraisal rate is because the insurance company REPLACES the goods rather than provides a cash payment. However, they will replace the goods only up to the insured RETAIL value. Even though they would "buy" the replacements thru wholesalers and maybe even at St. Maarten, the value is based on US merchant pricing!

 

Not only do you need to have insurance at the appraisal rate, but you need to make ANNUAL INCREASES in the coverage to account for appreciation in gemstone value. This is particularily true for diamonds. I believe the diamond cartel maintains about a 4-5% annual growth rate in pricing.

 

Let's say you bought a diamond in 2000 for $3000 in SXM and it was appraised at $6000. Today you would likely need to have $7000 insurance coverage. If you only had $3000 coverage, the replacement goods would be nominally 40% of what you originally purchased.

[PurrSusan]

Good answer, Kal! I sell this type of insurance & get asked this question--a lot! Also, if you are planning a major purchase, check to see if your item(s) will be covered effective on the date of purchase. One of our insureds lost her bracelet that she purchased on a cruise right after she got home. Fortunately for her she had 30 days from the date of purchase to add it to her policy so she added it with her appraisal information (and receipt!) and then she was able to replace it--boy, was she happy! We send out letters every three years to remind our insureds to update their amount of coverage. We automatically increase the amount of coverage slightly each year to try to keep up with inflation but sometimes, as Kal pointed out, it may not be enough. Hope this info helps! Susan

[ocngypz]

Wholesale prices of diamond solitaires has dropped. .. not only due to countries outside the Debeers cartel releasing stones on the market, but also because of more stringent grading in cuts. I've lost $9,000 in wholesale value

on one stone in the past 4 years Though it is certainly worth much, much more than the $850 it was originally purchased for in 1953! This is a D/IF stone over one carat with both a GIA and AGS grading certificate. Most stones purchased are not investment grade, and are quite numerous in the marketplace. Except for the newer cut graded stones, the standard "good-excellent cut" stones are just too numerous.

 

I am constantly having to readjust my coverage on an annual basis.

 

And of course, you should never purchase a solitaire retail anyway! Always use a diamond broker!!!