Top 5 Myths About Jewellery Valuations

WRONG! An insurance valuation is an assessment how much it would cost to replace a particular piece of jewellery in the current marketplace. The significant determinants of value of diamond jewellery are the 4 C’s of the diamond together with retail market pricing information. If all this information is available, a replacement value can be computed. If the diamond is accompanied by an internationally recognised grading certificate, the 4 C’s are known and accurate. All that remains is to price that diamond in the current marketplace. All that is important to your insurance company is that the valuation is detailed and accurate. This will ensure you of like-for-like replacement.

WRONG! You should be extremely suspicious of a jeweller who shows you a high valuation as proof that you are getting a great deal. In many circumstances, the jeweller using the valuation to sell you the item is in fact the valuer. If you were buying a house, would you let the seller perform the building inspection for you? A valuation should only be offered AFTER you have completed your purchase. After all, the true insurance replacement value of the piece of jewellery is what you paid for it.

WRONG! A valuation can only be accurate if the characteristics of the diamond have been accurately determined. Although many valuers have vast experience in the industry, the accurate determination of the characteristics of a diamond is a scientific process requiring extremely expensive diagnostic equipment. Only internationally recognised laboratories possess this required equipment. All a valuer can do for an uncertified diamond is make an educated guess of these characteristics. Unfortunately, even slight differences in the valuers grading to an accurate laboratory grading could translate to thousands of dollars in value.

WRONG! Some jewellers use valuations as selling tools. If the jeweller and the valuer are not independent, the valuation may be inflated to enable the jeweller to sell the diamond. The easiest way of inflating a valuation is to overstate the grade of the diamond. This can only occur if the diamond is uncertified. The valuer should have no vested interest in the specific value attributed to your jewellery.

WRONG! You will pay higher insurance premiums, but, in the event of a loss, your insurance company reserves the right to replace the jewellery with a similar piece. The insurance company can and will source the replacement at a cost much lower than you actually paid, regardless of the valuation. The only situation in which you will be paid out is if you have under-valued the item and the insurance company cannot replace it for your insured value.

Disputes often occur about the amount an insurer should pay for lost or stolen jewellery or similar goods. If you cannot provide a valuation of an item, the insurer will determine a value from a description (or photos if available) of the item.

However, if an item’s value is greater than the monetary limit in the policy, the insurer will only have to pay up to that maximum amount.

Insurers will only pay the value of the item lost. For example, if you lose one of a pair of earrings, you will recover only half the total value of the pair of earrings even though the remaining earring may be of little use if you cannot find a replacement.

Insurance policies cover damage or loss arising from particular events, not damage occurring over time through wear and tear, or because you didn’t maintain or repair your jewellery.