I do a lot of appraisals, approximately 25% of our store income in
2012 was directly or indirectly from appraisals. I get referrals from
insurance agents and agencies as well as from auction houses and even
from other jewelry stores. I also do a bit of insurance replacement
work. Appraisals can be very profitable, but they are not without
There are many misconceptions about appraisals. The first and most
common is that there are requirements that appraisers must meet, such
as they must be a Graduate Gemologist (GG). There are no legal or
licensing requirements, anyone can appraise jewelry. Insurance
carriers often set their own requirements, but there are no minimum
credentials, nor is there any formal certification required by any
law to be a jewelry appraiser. In fact, there is no certification or
licensing available even if one wants to be “certified”. I have one
insurance company that I work with that requires that an appraisal
for any single piece having a retail replacement value of more than
$25,000 be signed by a GG. Most insurers require that the appraiser
be “employed full time in the jewelry business”. Those are the only
"requirements" I have ever run into.
Another related misconception; if someone is a Graduate Gemologist
(GG), they are qualified to do appraisals. A GG is well trained in
gemstone identification and grading, but nothing else if that is
their only qualification. The Graduate Gemologist Course given by the
GIA offers no training in the valuation of in the
construction of jewelry, in the identification or valuation of metals
or craftsmanship, in writing an appraisal, not even a single lesson
on what minimum should be included in an appraisal. There
are groups that are dedicated to the training and qualification of
jewelry appraisers, NAJA (National Association of Jewelry
Appraisers), IJO (Independent Jewelers Organization), AGS (American
Gemological Society) to name a few, but they do not generally get
into the nuts and bolts of gem ID. It requires a lot of independent
study from a lot of different sources to become an accomplished
Another misconception is that when the seller does the appraisal,
there is a conflict of interest. In these days of heavy branding, who
is more qualified to establish the replacement value of a piece of
jewelry than the person or company that made it or sold it? For an
example, if someone brings me an Elsa Perreti piece from Tiffany and
Co. and I appraise it for what I think it “should” be worth and the
piece is lost, I will most likely be found liable for the difference
should it go to court. It is very common practice for an appraiser to
contact the seller for the replacement valuation whenever there is a
trademarked or branded piece. To not do so is irresponsible. Other
branded items whose replacement values should be verified by
contacting the seller or manufacturer include (but are certainly not
limited to) “Hearts on Fire” diamonds, Rolex, David Yurman, Todd
Reed, anything from Tiffany and Co., Cartier, Bulgari, etc. If it has
a recognizable trademark or stamp, I call the maker or retailer for
the retail value, because if there’s a loss, that’s what the customer
is going to want it replaced with (and more importantly, what they
are entitled to have it replaced with if they are to be "made whole"
under the common insurance phrase). The fact that I or someone else
might be able to make it better and/or cheaper is meaningless and to
appraise anything branded, whether that brand is well-known or not,
with that thought in mind is doing the customer a great disservice
and may also be putting the appraiser at great risk of legal action.
It IS unethical (not to mention illegal) to use an appraisal as a
sales tool or as a way to inflate the sale price to make it appear
that the customer is getting a bargain. That is fraud. But providing
a service for the customer by giving them a complimentary insurance
retail replacement value appraisal at the time of delivery is in no
way a conflict of interest. In fact, it is a service that is pretty
much expected if not outright demanded by most customers. There is
nothing preventing the customer from getting an independent appraisal
if they so desire. A good retailer should always be ready and happy
to refer the customer to an independent appraiser if they want a
The biggest indicator that something is amiss with a seller provided
appraisal is when the appraised retail replacement value and the
purchase price are more than about 10% apart.
That said, an appraisal should only be used for the purpose for
which it is written, i. e. a retail replacement value appraisal for
procuring insurance, estate appraisal for valuation for estate or tax
purposes, fair market value appraisal for resale purposes. Any other
use may constitute fraud, either by the appraiser or by the owner of
It is also very important to note that an appraisal, like a diamond
grading report, is an opinion. Informed and well documented maybe,
but an opinion nonetheless. An appraisal, just like a diamond grading
report, is NOT a certificate of fact.
Another misunderstanding of the insurance / appraisal relationship
is that if there is a loss, the insured will get a check for the
appraised value. Nothing could be further from the truth. The Retail
Replacement Value listed on an appraisal does only two things and
both favor the insurance company. It sets the insurance company’s
maximum liability in the event of a loss, and it sets the premiums
the insured will pay. That’s it. In the event of a loss, the
insurance company almost always retains the right to find a
"suitable" replacement, or if the insured wants a cash settlement,
they retain the right to pay only the amount it would cost them to
buy a “suitable” replacement. Most of the time, this works out to
around 50 to 60% of the Retail Replacement Value on the appraisal,
unless the appraiser has established and documented that the item is
a branded piece available only from a named retailer or source (e. g.
Elsa Perreti by Tiffany and Co.). If no specific source, artist or
brand is named, the insurance company usually gets to determine what
is a “suitable replacement” and the customer gets a check for the
wholesale replacement cost of the piece if purchased from a vendor of
the insurance company’s choosing. Then the insured can go after the
appraiser for the balance if they find they were underinsured.
This is all governed by insurance company policies and they vary
from company to company. There are very few legal regulations when it
comes to valuing and/or evaluating jewelry. The courts are there to
sort out the contractual details, but it’s the wording of the policy
of the individual company that really rules the day. Read the policy
if there are any questions about coverage.
There is so much more to appraising and insuring jewelry, too much
to really get into here. So Stef, I’ll answer your questions in the
order you asked.
Do you make your own or have someone else prepare them?
We do them here. We have a full gem lab and are equipped to do
pretty much everything required for a good jewelry appraisal. When I
have something to appraise that I’m not 100% comfortable with
evaluating, or if there is even a hint of the possibility of a
conflict of interest, I call in a friend who is a full time,
non-affiliated jewelry appraiser.
Are you a member of a professional appraisal organization?
We are members of IJO and are working towards becoming full members
Are you familiar with the Unified Standards of Professional
Yes, but it has no bearing on jewelry appraisals. It was originally
written in response to the savings and loan crisis of the 1980’s and
applies to the appraising of businesses and real property, not
jewelry or other personal assets.
Are you familiar with any appraisal educational programs?
Yes. There are several, GIA offers courses in gemology, NAJA, AGS
and several other organizations are dedicated to the education of
Do appraisals generate income for you or do you include them at no
Yes they do. We also include appraisals for any item purchased from
us with a purchase price of over $1000. I also offer free updates on
our pieces and half priced updates for appraisals that we did for
pieces not purchased from us.
Hope this helps!