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How to prepare for a jewellery insurance valuation

Published 21 October 2016

Christmas is coming. And while competition and rising rents have dampened profitability in jewelry retailing, sales figures for the holiday season look promising:

The key takeaway? Sales volumes may vary and decline, but the amount your customers are spending on individual items isn’t. High value jewelry, custom jewelry and bridal jewelry are still in demand - and you need to be prepared for that.

Why you need a jewelry insurance valuation

According to the Jewellers Association of Australia, a jewelry valuation (also referred to as a valuation certificate) is a ‘document that describes an item of jewelry in detail and also states the value of the item.’

Insurance is the main reason you need valuation certificates for your products, but there are others:

  • Customers may ask for them. This is especially true if you sell fine jewelry and precious gemstones. Customers will require a valuation certificate to get their jewelry insured.
  • Insurance companies insist on it. Most insurance companies require a valuation certificate and proof of purchase for items valued above $1000 prior to issuing cover.
  • They’re useful if you experience loss or theft. A valuation certificate includes a comprehensive description of an item, often with detailed photographs. This information can help you remake or replace a piece of jewelry if it is ever lost or stolen.
  • It validates your pricing. Your customers can be sure they’re paying the correct, fair price for an item if it comes with a valuation certificate, as it states the official value of the item according to market conditions.

In a nutshell, an official valuation certificate is essential for protecting your business in the event of loss, theft or damage. It constitutes proof of ownership and proves the true value of your jewellery during the claims process.

5 ways to prepare for a jewelry valuation

You’re not legally obligated to issue customers with a valuation certificate for every item of jewelry you sell, but most professional jewelers do – especially for high value items. But jewelry valuation is not as simple as Antiques Roadshow makes it look.

Jewelry valuation is a complex process that requires a specialist skill set, knowledge of the jewelry market and time. The National Council of Jewellery Valuers (NCJV) explains:

‘A typical jewellery or fine arts valuation involves examining each item to assess the quality and arrive at a value judgement based on current market conditions. While two items may appear identical to the untrained eye, each has qualities that can affect the final valuation. Different markets may vary enormously and this factor is taken into the account by the valuer.’

If you need valuation certificates but aren’t sure how to get them or where to start, don’t worry. Here’s what you can do:

1. Choose which items you need valuations for

Since you’re not legally obligated to issue valuation certificates for every piece of jewelry you sell, you can be selective when it comes to choosing which ones to put forward for jewelry insurance valuation. As a rule, it’s best to have valuation certificates for jewelry priced above $1000, antique jewelry and pre-owned jewelry.

2. Pick a valuation type

There are many types of valuation certificate. Each type serves a different purpose (such as insurance, auction or divorce settlement), reflects different markets and states different information.

The most common valuation type used by insurance companies is a Retail Replacement Valuation. According to the NCJV, this is ‘a detailed assessment that estimates the likely replacement price at a traditional shop.’

3. Photograph your items

It always helps to have detailed, high-resolution photographs of each of the items being assessed. Remember to photograph the items from different angles so you can capture and record their unique qualities. Share these images with your valuer, and keep them on file for your own reference.

4. Find a registered valuer

You need to commission a valuer who is experienced, skilled and able to issue official valuation certificates. There are more than 450 NCJV Registered Valuers™ in Australia, so you shouldn’t have trouble finding one. Just remember to ask for a copy of their seal, and to sight their NCJV membership certificate.

5. Schedule follow-up valuations

Markets evolve, trends come and go, and even gold can tarnish over time. Renewing your jewellery insurance valuation every two to three years will ensure that your certificates reflect these changing market conditions and general wear-and-tear. In turn, it will help you adjust your prices accordingly and ensure you’re not paying excessive premiums if prices decrease.

Get set for the festive season

And there you have it - five simple steps for getting a jewelry insurance valuation that will:

  • Enable your customers to insure their jewelry
  • Help you avoid paying excessive premiums on your own policies; and
  • Ensure your prices are fair

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