Appraisals on Fine Jewelry for Estate or Insurance
There are two main reason to do a appraisal on a piece of Fine Jewelry. The Primary reason is for Insurance Purposes. This appraisal is
used as a verification of the current retail replacement value for your insurance companies records. In the case of a stolen or lost item  these
appraisals determine the amount your insurance company will allow for replacement.
What is an appraisal?
An appraisal is an expert opinion as to the identification, authenticity, quality, design and value of a jewelry item. The detailed information
provided on an appraisal is helpful when selling, yet the valuation is not. An appraisal is never an offer to buy unless specifically stated.
Limitations of an appraisal
If the stones are mounted, the grading of color, cut, clarity and weight will be approximate. Unless the stones are removed from the
mounting, a positive identification of the stone and its quality are not always possible with many gemstones.
How is the value on an appraisal determined?
The formula used to attain the value stated on the appraisal is determined by the needed purpose of the appraisal;  i.e. insurance
replacement , estate liquidation, fair market value (IRS), bankruptcy, etc.
Understanding the different purposes of appraisals and how they use different value criteria, helps to explain the confusing and not always
understood difference between market value and insurance value appraisal.
Fair market value is a legal term defined by the Treasury Regulations (IRS) - Fair Market Value (F.M.V.) - "That price at which property would
change hands between a willing buyer and a willing seller, neither being under compulsion to buy or sell, and both having reasonable
knowledge of relevant facts.
Insurance Replacement Appraisal - The appraisal states the approximate price at which you could replace the article with a similar article
at a retail store, which sells jewelry of like quality. The retail replacement price includes both the wholesaler's and the retailer's profits.
You should not expect to be able to sell the article for the appraised value, as the insurance value is usually significantly higher than the
actual cash value.
Estate Appraisal - This requires an appraisal of the cash value of an item, based on what a willing buyer and a willing seller would agree to
without a forced sale. An estate appraisal is based on the premises that the collection is to be liquidated. Since it does not consider  selling
costs nor current prices for labor or creative design, this type of appraisal is normally lower than appraisals for insurance replacement value.