Jewellery Insurance - the nightmare begins

Call me Jack

Last time we talked about how to get your jewellery valued for insurance and the problems associated with these valuations - to get the full story, its going to be a bit lengthy, so bear with me.  I mentioned the fees that might be involved to get this valuation.  Here's an example

We had a customer in our shop in 2005 who had a ring valued by another local jeweller.  This ring was Georgian, so around 200 years old.  It had a centre diamond of around 0.8 carats and 7 flanking diamonds set in a cluster around 0.35 carats each - approximate total diamond carat weight of around 3cts.  The metal was platinum.  She wanted to sell it and was looking for £6000 cash because the other jeweller had valued it at £11,800.  We could only offer her £1500.

When asked why, we told her the ring was a "marriage" between two ring styles, the original Georgian base and a complete mess of a repair perhaps carried out in the early 20th Century.  Whilst the centre diamond was likely original, all the other diamonds had been replaced during the life of the ring with extremely poor quality mixed cut diamonds.  If the ring had been pristine, it might have been worth around £10-12,000 at auction, but in its current condition, it might not even have made £2000 at auction.  She, of course didn't accept this offer and was really annoyed and upset when she left (no doubt blaming us and not the other jeweller).  So why did the other jeweller value the ring like he did?

The answer is simple.  When you value a piece of jewellery, it shouldn't be a case of just taking 5 minutes looking at hallmarks or stones and coming up with a figure.  There is a certain amount of research into the piece.  Sometimes this is quite easy, using the internet to compare prices and trade tools like the Rapaport diamond report (up to date wholesale diamond price list) and then your knowledge to identify pieces as to what age they are, etc.  You might need to take photographs, etc as well and write a full report for the customer if the item is rare or collectible or has an intricate design which can't be described.  

Here's the nitty gritty - A valuation takes anywhere between 40 minutes for a new piece of jewellery and 5 hours of actual work and maybe even a few months of down time waiting for information  for really complicated valuations.  The average cost per piece is a minimum of approx £50-70 + VAT as of time of writing (2009).  For most pieces, especially really expensive pieces, the valuer usually wants this fee and up to 2% of the value placed on the item.  In fact, many unscrupulous jewellers will simply charge 1% of the value of the item with a minimum of whatever their hourly rate is, say £55 - or they may send it to a valuation expert, NAG (National Association of Goldsmiths) qualified who will charge them, and then they add their, say, 1% of the value + a nominal fee.  Basically what I'm trying to say is there are no rules or guidelines.  As long as the jeweller is insured to do valuations, then they don't need any experience or knowledge to do them, just a piece of paper and a pen.

So, back to our example of the poor unsuspecting member of the public who got scammed by the other local jeweller.  It might have been that he didn't know the ring was a complete mess and had no value beyond the components at scrap, but we doubt that very much.  He saw an opportunity to charge 1% of the value of the item instead of a minimum charge which should have been levied.  He charged her £150 + VAT for the valuation, which was simply a one paragraph statement (no picture and no provenance) and the value simply stated as "antique".  We would not have taken the work on in good conscience as we know the value of the ring did not need to be appraised at all - just estimated which we would have done verbally for free with an explanation as to why.  The most we charge for single straight forward valuations is £70 + VAT. This is in line with current NAG experts.  No naming and shaming here as its too close to home, but needless to say this isn't the only valuation we've seen from this jeweller which is well inflated.  How can an insurance company insure a piece of jewellery valued by this jeweller?  But they do - and then you are over-insured and paying the premium for that.

The second example is that of pieces that have been made by a jeweller who is now very collectable or important for whatever reason.  We had another customer in the shop who had lost her wedding ring, a silver one, made by a renowned artist jeweller who had won several awards.  The ring had never had a valuation certificate and had been bought some 30 years ago for £45.  She had the name of the jeweller and a good picture.  We identified the piece as being definitely in the style of this jeweller, who we knew personally, so we were surprised when we discovered that the insurer had offered £10 only for a replacement (in Goldsmiths), especially since a silver ring by this jeweller was now worth well over £1000.  As the lady in question was very upset by this situation, we decided to intervene and we called the jeweller and asked if she would make another ring for the client, who had lost hers.  She was no longer officially working, but she said she would do it as a favour to us.  The cost of the ring at trade was some £900, we added a nominal fee for our time and the insurance was forced to comply as the lady was insured to £1000 for non specified losses.  Just as an update, sadly we have now lost this celebrated artist and her pieces are now fetching £3000-4000 at auction, so any valuation would have to reflect this.  Of course, at the time this ring was actually covered by her no specified items cover, but now it would have to be specified and there can be no direct replacement for the ring as it is a one off piece, so the fact that it is irreplaceable may be something she would want to be properly insured for.

When valuing anything, knowledge is king.  If you take your antiques to the antiques roadshow, generally they know something about what you have as they have several experts in specific fields who can advise on what they are and how much they will get at auction for something similar.  Jewellery is usually a more complex genre where there are several experts in single disciplines who may need to be involved to value one piece so a valuation can require more than one opinion or someone with a deep and broad experience.

The moral of this story is - 99% of high street jewellers have no place in valuing items for insurance purposes or otherwise.  Often an antiques centre will do a better job in 5 minutes because they will actually offer you a price for the item on the spot AND you won't get charged for that information.  Now there are no guarantees unless you get the item appraised properly ... but even that is a real issue, as often the NAG approved valuers often get this wrong on complicated pieces.  So the basis for insuring jewellery in this country is flawed at the most basic level and its you, the public, that suffer.

You will find more examples like these on this blog.