An insurance appraisal is a written valuation document prepared by a qualified appraiser to establish a value at which a piece of jewellery should be insured. The appraisal exists to allow an insurance carrier to set premium and to settle a claim if the piece is lost, stolen or destroyed beyond repair. It is not a guarantee of resale value, fair market value, liquidation value or any other measure of what the piece would fetch in any particular transaction; it is specifically a replacement-cost-new figure tied to the policy structure of the insurer.

What the document contains

A defensible insurance appraisal includes a thorough physical description of the item: metal, weight, hallmarks, manufacturer if attributable, period if relevant, and a complete listing of stones with measured weights or estimated weights, dimensions, colour, clarity, cut, treatments where known, and the attribution to species and variety. For diamonds above the threshold at which independent grading reports are routinely issued, typically 0.30 to 0.50 carat, the appraisal references and ideally appends the laboratory report. Photographs documenting the piece from multiple angles are standard. A statement of the appraiser's qualifications, the date of inspection, the methodology used to derive value and the terms under which the appraisal applies should appear on the document.

What value is reported

The reported value is replacement-cost-new at retail, in the geographic market in which the insured customer would replace the piece. Industry-standard practice is to research current retail prices for equivalent diamonds and coloured stones and equivalent mountings, including labour and overhead, and to present a value that reflects the cost of producing or sourcing a comparable piece in the present market. The replacement-cost basis is typically higher than the original purchase price for older pieces because it reflects current rather than historical pricing, and is normally higher than secondary-market or wholesale-trade values for the same reason.

Standards and qualifications

In North America the relevant standards are those of the American Society of Appraisers, the American Gem Society, the National Association of Jewelry Appraisers, and the International Society of Appraisers. USPAP, the Uniform Standards of Professional Appraisal Practice, governs appraisal practice generally and is incorporated into all serious appraiser-credential frameworks. In Europe and Asia equivalent standards exist under various national bodies. Appraisers should hold gemmological credentials, typically GG (GIA), FGA (Gem-A) or equivalent, and an explicit appraisal qualification beyond the gemmology credential alone.

Frequency and use

Insurance appraisals should be reviewed and updated periodically because replacement costs change over time. Many insurers require an updated appraisal every three to five years for high-value pieces; the appraisal is then the document that drives premium recalculation and forms the basis for claim settlement. Customers should keep originals in a secure location separate from the insured pieces themselves and should ensure the appraisal language matches the insurance policy's basis of valuation. A retail-replacement appraisal does not match a stated-value or actual-cash-value policy and the mismatch can produce surprise at claim time.