THE APPRAISAL PROCESS
Exactly what is a good insurance appraisal anyway?
Brevity may be the soul of wit but it's definitely not the soul of a good appraisal. The days of the one-line appraisal—"one gold and diamond ring, $2000"—are over. Or at least they shouldn't be accepted by insurers.
An insurance appraisal must be useful to the underwriter and, should a claim be made, the adjuster. It needs a detailed description as well as a valuation, and it must be prepared by a reliable appraiser.
Valuation is the first thing the underwriter wants to know. The valuation should be based on the current selling price—not an imaginary "list price" that the store always discounts, and not necessarily the purchase price. The date on the appraisal shows when the valuation was determined. This is important, since jewelry can rise or fall in value. Particularly with expensive jewelry, the valuation should be updated every few years to keep it current and the premiums appropriate.
A detailed description is important to the underwriter but crucial in settling a claim. Descriptive appraisals can be hard to come by. A survey by JCRS of appraisals submitted to 21 insurance companies found that most of them lacked the most basic information. For example, 43% of diamond appraisals neglected to give even carat weight. Although the survey was conducted several years ago, little has changed. How long will the insurance industry continue to accept inadequate appraisals?
Unlike other property claims, where the item is usually damaged, most jewelry losses are total. When a claim is made, there's nothing to inspect. Without a detailed description, the adjuster is at the jeweler's mercy, and even the most honest jeweler will have to rely on guesswork. For such a settlement the insurer will probably pay more than is necessary and the claimant will likely be disappointed. On the other hand, with a description of the lost piece, the adjuster can ask several jewelers to price a replacement and choose the lowest bid, and the policyholder is assured of a like-kind replacement.
The accuracy of both valuation and description depends on the reliability of the jeweler/appraiser. TV reporters who took a piece of jewelry to several jewelers for appraisal received widely varying valuations. Even the same jeweler would come up with different valuations for the same piece presented on different occasions.
The title "jeweler" implies no training or expertise—anyone who sells jewelry is a "jeweler." The JCRS survey of insurance appraisals in 16 states found that only 21% were prepared by graduate gemologists. It is possible for a jeweler to gain some expertise on the job, so you could cross your fingers and hope for a truthful appraisal. A better approach is to seek out a jeweler/appraiser who has a graduate gemologist (GG) degree. Note that a jeweler can become a gemologist by taking a brief correspondence course, with no lab work involved. A graduate gemologist (GG) degree requires six months' training and includes practical experience in a gem lab.
Even a graduate gemologist may not understand how the insurer uses an appraisal and so may leave out crucial information. Certified Insurance Appraisers (CIA™) are graduate gemologists who have taken additional training in writing appraisals for insurance. They provide detailed information and warrant that they have inspected the jewelry in a gemological lab, so the adjuster can accurately price replacements.
FOR AGENTS & UNDERWRITING
ACORD, the nonprofit organization that develops standards for the insurance industry, has incorporated the above standards into its Jewelry Insurance Appraisal form 78/79.
ACORD form 78/79 says the purpose of an appraisal is to "1) Describe the item in such detail as to adequately identify it from other similar types of jewelry, 2) verify the condition (and existence) of same, and 3) assign a reasonable value for the item." The appraisal warrants that any synthetic gems and uncommon gem treatments will be identified.
An appraisal on ACORD 78/79 gives the insurer all necessary information in a standardized, easy-to-read format. It warrants that the appraiser is a graduate gemologist who is also trained as a Certified Insurance Appraiser™.
FOR CLAIMS
ACORD 78/79 is the best appraisal to work from in settling a claim. If you do not have an ACORD 78/79, use ACORD 18, Jewelry Appraisal & Claim Evaluation form. ACORD 18 lets you pick out relevant information from the documents you have (appraisal, sales receipt, photo, sketch), lay it out in a standardized format, and see what information may be missing. You can then interview the claimant and possibly gain more specifics that will help the jeweler price a replacement.
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