Jewellery insurance - jewellery valuation scams

Call me Jack

Well - a new client has asked us to value and set a diamond for her. It is quite a nice pink diamond which she bought from a direct source at what we would consider a keen price since the diamond came from the Argyl mine in Australia. Anyway, that isn't the interesting bit - what is interesting is that before finding us she went to her local jeweller and asked them to, firstly, value to stone, and then for a quote to set it (she didn't get as far as the quote though).

The local jeweller sent the stone off to their (we assume) NAG approved valuer who kept it for nearly a month while they attempted to put a value on the stone (apparently the most experienced valuer was ill was the excuse). When they did eventually manage to come back with some sort of value, it was verbal and somewhere between £1000 and £10,000. Nothing like leaving yourself a margin for error is there?? Indeed the actual written valuation seems to not note the diamond's source and values the stone at £12000. She was charged £50 for this. Needless to say, the customer wasn't very happy, which is why she came to us.

She told us this story, and also that during the attempt to value to stone they had called another shop which she had previously used to make a few jewellery repairs. They use small sticky labels on their packaging, just the sort that are really useful to secure small packages, which is exactly what she had re-used it for on the diamond package (called a wrap) to secure the diamond so it didn't fall out. Apparently, the shop had put 2 and 2 together and remembered that she had mentioned a loose pink diamond a couple of weeks earlier so they called her to let her know - the worst part of this story is what they told her.

I seems the valuation company had got someone (assume one of the valuers, a lady actually) to call the shop whose sticker was on the package and said that they had bought this particular diamond from them and would like to buy another - how much would that cost? Of course, the bewildered shop assistant had absolutely no idea what she was talking about and, naturally, asked how much she had paid for that one ... to which the reply was "no actually, lets start again, I'm a valuer and want to get a retail value for this diamond for insurance, so how much would you sell one like it for" . Bearing in mind this is a cold call to someone asking very specific questions about a reasonably rare stone, the shop found this quite irregular and probably reminded her that she was the valuer.

So what are these valuers up to? Its hard to say isn't it. Clearly they had absolutely no idea what they were doing and, after a month of fumbling, were clutching at straws. The point is - valuations on jewellery are like valuing houses. Many factors come into play, and you have to really know your market to make a good appraisal of the worth of an object. For this you need some experience and some training. Like I have pointed out in other posts, the training to become a jewellery appraiser isn't as vigorous as say, the Royal Institute of Chartered Surveyors (since we were likening it to property valuations). Most valuations are easy and have easily accessible data (like a makers mark, a year and and assay stamp of metal and approximate carat weight of stones) which makes them easy to find a replacement cost - with a couple of months doing the job a junior assistant could potentially do this. Some are not as straight forward and require more specialist knowledge and it is these that end up totally bamboozaling the registered valuers. Problem is, they don't admit their inadequacies and undervalue or overvalue the item causing major problems should it go missing or get damaged.

But is it too much trouble to ask the owner of the piece a few questions instead of calling round all and sundry and making yourself look like a fool? It didn't take us long to put a value on the stone, actually about 5 minutes since it had a clear certificate and a reference number which when we accessed it told us everything we needed to know. We also asked the client where it came from, which she was happy to tell us, that she got it from Australia - so there is only one place for a possible source, the Argyl mine. We have dealt with these types of diamonds before and this one was good quality and was worth towards the upper end of the very wide margin the first valuer had put on it verbally.

In this case, the diamond has been seriously overvalued to the tune of around 30% which means that year on year the customer could be paying 30% more than they need to for premiums and, indeed, would unlikely to be offered a cash settlement for the diamond at £12000 despite paying the premiums for that amount.

All seems like common sense to me - watch out, there are professional scammers about taking your money and putting you at risk of insurance losses through their own lack of knowledge.