Insurance Appraisals or Sales Receipts ?
Have you ever wondered why the dollar amount of an appraisal may sometimes be higher than the sales receipt for a particular jewelry item? The answer may surprise you.
A sales receipt will list generic items such as the date, item, price you paid and the name of the establishment where you purchased the item.
An insurance valuation or description should entail more detailed information on the item. The appraisal will include particulars such as color and clarity of the gemstones, the type of metal, number of gemstones, design and other important related details. If the item being described is ever lost or stolen, it can be replaced with a similar item of the same quality. The main difference between an appraisal and the sales receipt is the current market value.
For example, a consumer purchase’s a diamond tennis bracelet from a retail jewelry store. The original price of the tennis bracelet is $3,000. On sale, the consumer only pays $2,000, which is a discount of 1/3 off, a savings of $1,000. The description of the item on the receipt will probably be described as; a 3.00-carat, yellow gold, diamond tennis bracelet and the price paid. While you may think the description of the item on the receipt is sufficient, it really isn’t detailed enough for an insurance company that might have to replace it if it were damaged, lost or stolen.Which brings us to the point of our article. What dollar amount should the appraisal reflect, the actual amount that was paid or what the item was originally priced at?
The fact of the matter is, after the correct market research has been done, the item should be valued at what is called the “Retail Replacement Value”. Retail Replacement Value takes into consideration current market conditions within the same geographic area fro similar or like product.In other words, the appraisal should reflect an average price or replacement value of what the market demands for a like item of the same or like quality. In this case the amount would be $3,000 dollars, not necessarily for the reason the original price was $3,000 but for the fact that after thorough research, it was determined to be the most common selling price for that particular area. This is one of the reasons an appraisal has a different function from your sales receipt.
What if the item was appraised at only $2,000 and was lost only a few months later? The purchaser collects the money from the insurance policy and attempts to purchase the same type of tennis bracelet that was lost or stolen. Only this time the purchaser was not fortunate enough to find the bracelet on sale. Remember, when first purchased, the bracelet was 1/3 off the regular price. After shopping around, the purchaser realizes she or he simply cannot replace the item for the appraised value of $2,000. In other words, the item was not properly appraised and therefore under evaluated.
This is why it is very important to have a thorough appraisal on all your jewelry items. Industry experts suggest your jewelry be inspected at least once a year as well as your appraisal up-dated.
These days, consumers are more educated and savvy shoppers. By shopping and comparing apples to apples, consumers are more likely to identify what the current market is for a particular item. I firmly believe my best clients are those who have done their homework, this way there are no surprises and they know exactly what to expect for their hard earned dollars.
<-- Previous Page
|
