How Much Does Your New Ring Appraise For?

The importance of "appraisal value"

This is a very common question. Although a diamond's value is based heavily on a GIA report, there is no "appraisal" value on a GIA Diamond Grading Report.

Two main reasons most people need an appraisal.

  • To obtain insurance: A homeowners policy may automatically cover you for items up to $1000. Generally speaking larger items will need a rider. Contact your insurance company for specifics in your case. Many insurance companies will require an appraisal for to cover costly jewelry - in some cases a seller supplied appraisal may be acceptable. We advise consumers that a realistic appraisal value benefits them. If the insurance is based on an appraisal where the value is inflated, you may end up paying an inflated premium. In the event of a loss most policies allow the insurance company the right to replace the item with a "like" stone, as opposed to a monetary reimbursement. In cases of inflated appraisal value the consumer may have paid up to double for insurance. For this reason, we advise our buyers to have us value the item at what they actually paid on the complimentary appraisals we supply. Speak to your insurance agent, and find out how much the per thousand cost is. If the item is something which can be replaced fairly easily (and this includes most diamonds as interpreted in virtually all insurance policies), request the seller use a realistic replacement value on the appraisal of a seller supplied appraisal.

  • Consumers may seek an appraisal to make sure they are getting a good deal: Now we get into the dicey part of seller supplied appraisals. In my experience, sellers stressing an appraisal value to suggest the buyer is getting a great deal are generally using an inflated value to make their case look stronger. To make this problem worse for consumers, there are gem labs, other than GIA, that assign a dollar value - in some cases based on an extremely high retail price. I would think many people are skeptical when a seller claims an item is worth exponentially more than they are asking for it- but it still bears repeating.

What is the correct appraisal value?

Even if there is no bad intention, any assigned value is meaningless without context. As mentioned above, insurance companies consider personal items "fungible" and will replace with something similar. Unfortunately, something you consider priceless will be replaced by the insurance company in much the same way you bought it in the first place. A diamond of similar characteristics will be found by your insurance company.

For this reason an appraisal with a replacement value relatively close to the price paid seems to be consumer friendly. This would apply to a large majority of diamond purchases - colorless Round Brilliant Diamonds. More unusual and hard to find diamonds - such as certain extremely rare and valuable fancy colored diamonds will have a much greater potential variance in the case of loss replacement - therefore a higher appraisal value than purchase price may sometimes be in order. In such cases a far more specialized appraisal or gemological service may be required.

Explaining context as it applies to your appraisal's "replacement value" involves considering where a diamond was purchased in evaluating a fair replacement price. It would be reasonable to use the following values for the same hypothetical diamond based on where it was purchased:

  1. From a well-respected online diamond seller: $11,500
  2. From an aggressively priced Brick and Mortar store: $12,500-$16,000
  3. From the most expensive store in Beverly Hills: $24,000
  4. From a consumer to consumer auction or classified site: $5,000

A case could be made that any value from $5,000 -$24000 might be considered accurate, but this is exactly what I meant about context. It means neither a $5,000 or a $24,000 appraisal is wrong.

It is not in consumer's interest (in my opinion) for consumers to place any weight on the "appraised value" in any purchase decision.

Where to get an appraisal?

A seller provided appraisal may be valuable. Sellers with integrity can write the best detailed description of what they are offering. Such an appraisal could be used to insure the item, or to help a second party appraise it. Diamonds by Lauren proved a detailed appraisal with every purchase.

If an independent appraisal is required by insurance, or if the buyer wants a second opinion it is extremely important not to use any appraisal service connected to the seller in any way. It is important to stress that consumers need to vet their independent appraiser to the same stringent level as the seller.

It is highly recommended for consumers wanting an independent opinion to find an appraiser that has no ties whatsoever to any seller - as opposed to a jeweler offering appraisals.

Summary

Although a seller provided appraisal may be useful, our advice to consumers is not use appraisal value to determine the market value of a diamond. If the appraisal is for insurance, check with your carrier and jeweler to make sure you don't buy too much insurance.

If you want a second opinion on a purchase you have made, choose carefully - make sure the person giving their opinion is knowledgeable, and in no way connected to the seller.