Pearl Appraisals
If you are investing in fine pearls you should have them independently and professionally appraised for a few reasons.
1) To ensure that the pearls you bought are what was represented by the jeweler in the bill of sale.
2)To ensure that you paid a fair price so that you can exercise your guarantee if necessary.
3) To ensure that you have the necessary insurance in the event of loss or theft.
It is especially important to get an independent appraisal by a qualified appraiser. It is common practice for jewelers to provide their own "retail" appraisals at 2-3 times the price at which they are selling the item.
This makes customers feel like they are getting a deal. If these inflated appraisals were accurate we could start a great business buying pearls and other jewelry and quickly reselling them for double or triple what we paid. If you are able to make money with this strategy you will be the first.
If you're investing in fine pearls insist upon a guarantee of sufficient duration so that you have time to source an independent, professional appraisal of them. You wouldn't value a car based upon what the dealer tells you it is worth, right? Get a detailed bill of sale backed by an iron clad, no hassle guarantee and then get your own appraisal.
Using your appraisal for insurance purposes is a bit trickier. Shocking, I know, because insurance companies usually make things so easy.
Last week I got a call from a client who had recently purchased a magnificent strand of larger, perfectly matched aubergine Tahitian pearls from us. She was excited because the pearls she bought from for $8,000.00 had been appraised for insurance purposes for $18,300.00. Because we sell wholesale direct to the public this is not an unusual occurrence.
But here's the thing. Most insurance policies for pearls and other jewelry allow the insurance company to exercise a replacement option. The insurance company collects the premium on the appraised value of $18,300.00. If my client's house burns down or someone steals her pearls the insurer does not promptly mail her a check for $18,300.00. Rather, they examine the information provided in the appraisal (and it had better be thorough, detailed and supported with photographs if you expect to get back something close to what was lost) to then source a "like kind" replacement. And trust me, they know where to buy it for a helluva lot less than 18 grand.
I advised my client was not to pay the steep premiums on an $18,300.00 policy if she can buy a "like kind" replacement from for $8,000.00. Rather, she should take her appraisal to an insurance company that will sell her a "cash value" policy for $8,000.00.
Here's what you need to know about pearl appraisals and insurance appraisals:
1) You need a pearl appraisal from the seller like a fish needs a bicycle. Get your own appraisal.
2) You want an independent, 3rd party appraisal from a qualified professional. Call the American Society of Appraisers at (703) 478-2228 and ask for a referral to a Master Gemologist Appraiser in your area. Jewelers sell jewelry. Jewelry appraisers appraise jewelry. Selling jewelry does not qualify one to appraise jewelry.
3) A proper pearl appraisal provides a complete description of the item including:
o Type of clasp or setting
o Whether pearls are natural or cultured
o Type of pearl (Tahitian, South Sea, Freshwater, etc)
o Shape (Round, off round, baroque, etc)
o Color and Orient
o Luster
o Complexion (surface quality)
o Size of pearls
o For strands, the length, number of pearls, knotted or not, matching
o Pictures of the item
4) Understand what kind of insurance you are buying. Most jewelry insurance policies include a "replacement option." In effect you buy $20,000 of coverage for something that costs the insurer $5,000 to replace.
5) Buy your pearls from a broker who specializes in pearls, preferably one who sells wholesale direct. Then use your favorable 3rd party appraisal to buy "cash value" insurance that allows you to pay a lower premium and source your own replacement.
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