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Is Your Engagement Ring Valuation Accurate?

Q Report Team
Updated on March 08, 2023
4 min read

Jewellery valuations have received a bad rap over the last 10 years due to the lack of consistency and credibility they offer.

It’s incredible to think that there is no definitive jewellery valuation standard worldwide. Customers need to rely on the accreditation of a valuer, or the skill set and legitimacy of the person preparing the jewellery valuation.

In Australia, valuations have improved over the years with the National Council of Jewellery Valuers (NCJV) working hard to develop a standard by which registered valuers are to abide by. However, this is more with respect to the detailed specifications captured on valuations rather than the values attached.



Why Do I Need a Valuation?

The first question you have to ask yourself is why do you require a valuation? What is its purpose?


At the top of all jewellery valuations is the statement - “For Insurance Purposes Only”. In other words, you would like to insure your engagement ring and the insurance company will use the document to identify the item being insured as well as the insured value to insure it at.



What Should a Valuation Include?

A valuation should include a detailed description and specifications of the ring. A superior valuation should contain 1 to 2 photographs of the engagement ring, identifying any unique features.


It should refer to a diamond certificate (if one exists) or contain as detailed and accurate descriptions of the centre stone as possible. The same goes for any other gemstones in the item.


The caratage (is it 18 carat gold or platinum as an example) must be identified as well as the total item weight. Ideally, the different tests applied by the valuer to determine the authenticity of the gemstones and the caratage should be listed. Once the above has been detailed, the final step is the value placed on the engagement ring.




The Value

As stated above, the reason why people get jewellery valuations is so that they can insure their jewellery. So, if an insurance company wants to know the value at which to insure an item, in the case of a new item, wouldn’t the value simply be the purchase price?


After all, the purchase price should be the most accurate reflection of the value of the item in today’s market and if the item is lost, it could be replaced for that same amount. You would think so. Unfortunately though, the value placed on a valuation document is often not reflective of the purchase price. Why is this the case?


Over the last 20 years, retailers have found themselves constantly discounting their merchandise. So when a customer asks for a valuation, it is often greatly inflated compared to the purchase price. This gives the customer that great feeling that they got an amazing deal and allows the retailer to promote what an excellent price the customer paid.


Clearly there are times where the customer did purchase at a really keen price. In those cases, should that customer then lose that item, it would be very difficult for the jeweller to replace that item again at the same price. So an increased value on the valuation document compared to the purchase price in this case would make sense. Especially for insurance purposes.


However, where the valuation becomes distorted and should be questioned by a customer, is when the retailer provides a valuation which is double the purchase price (or in some cases more). It is common for a jewellery valuation to reflect a price up to 30% more than the purchase price. In 9 out of 10 cases, this is acceptable and is more than likely accurate. A valuation which reflects a price which is double or greater than the purchase price should be an alarm bell to the customer as to its accuracy.



So Should I Insure at the Valuation or Purchase Price?

When insuring a newly purchased item, in most cases you should insure it at the purchase price. This ensures that you don’t pay premium on an inflated figure.


When purchasing a second-hand item of jewellery however, the purchase price may not exactly be indicative of the market replacement cost. Even in the case of second-hand items, it is recommended to get a second independent opinion if the item is valued at double the purchase price or more.



Insurer’s Policy

If your insurer requests to see a valuation, that’s fine. However, they should not demand that it be insured at the valuation figure, unless they have the expertise to determine what the actual replacement price is of the item in the current marketplace.


If an insurer tells you that they have to insure at the valuation price, and that price is double the purchase price, you should be very sceptical. If on the other hand your insurer suggests that the valuation price is accurate because they can demonstrate to you that they have the expertise in terms of knowing diamond prices and costs of manufacturing jewellery, then at least you have the confidence that there is rationale behind the reasoning.


There is one important question you need to ask an insurer who demands to insure at double the purchase price – will the insurer pay out that full figure as shown on the valuation as an Agreed Value policy, or will it be up to the insurer to decide the settlement figure?


That’s right, some insurers may pay half the sum insured even though you’re paying premium on the full sum insured. The best advice we can give you to determine whether your valuation is accurate, is make sure you have detailed specifications as discussed above, and the figure is close to the purchase price as possible.


Agreed Value Policy

Coverage for the agreed value shown on your policy. Not “up to” that amount.

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