Is Your Jewelry Insurance Up-To-Date?


Did you know insurance appraisals for your jewelry items should be updated every 3-5 years?

Jewelry tends to fluctuate in value.  Metals, labor, and gemstones all move in price throughout the year, and over time, these values tend to gradually increase enough that the evaluation you received 7, 10, or 20 years ago, may be significantly undervalued, which could potentially cost you thousands of dollars should the need to file a claim ever arise.

At GAL, we try to estimate a value that will provide you with a valid assessment for at least a 3-5 year period.  By anticipating an average rate of growth during that time, we build in the extra value that we foresee the market to increase over time.  By taking an average annual increase from previous years metrics within the market, we are able to provide a more accurate appraisal that sits right in that sweet spot of both allowing for a little time in between updates, and preventing you from having to update the appraisal each year.

So why not just estimate a 10-20 year rate of growth?

For a couple reasons:  One, your insurance premium is typically based on the value of the jewelry that we determine for your appraisal.  If we were to anticipate a value with a 10, 15, or 20 year rate of growth built in, you’re just simply paying too much for your insurance for the first several years.  And who wants to spend more money than necessary, especially when it comes to insurance?  Secondly, a 10-20 year period is a LONG time when it comes to determining market sentiment.  5 years can be tricky, but again, we’re basing off of previous years averages, so the difference of a couple of years isn’t usually that significant.  3 years is a pretty straight forward timeframe to estimate though.  The supply from gold and gemstone mines usually takes a year or two just to go from its country of mined origin to a retail showcase.  There’s wholesale markets all around the world just for the uncut rough before it even gets to the planning and cutting stage.  Once the uncut gem is purchased, a rough expert and/or lapidary carefully plans, cuts, and polishes the gemstones, at which point it gets distributed through an entirely different channel of wholesale dealers, specifically trading the newly cut and polished rare beauties.  Once the finishing process is completed, it gets selected to serve its purpose where it will generally be set in a piece of jewelry to be worn and admired.  This is the stage in which it can take just a matter of days for more commercially available material to be set into a piece of jewelry, but there are certainly occasions that it might be months, if not years to finalize the design and execution of a handcrafted setting.  I have personally been involved in projects that took well over a year before the setting was finely tuned enough, often going back and forth between the client and designer several times before the last shine is complete.  Based on the rarity to source and supply some gemstones, to the cutting and polishing process, to the design and completion of a setting,  this entire process can take quite some time.  Appraisers are generally quite well connected in the jewelry industry, so we hear and see a good portion of this process, sometimes even having a hand in the process to provide pre-grades and cost analysis, which gives us a great deal of insight into the overall market and the direction it might be headed over a period of time.  (ie. which countries are in short supply, geopolitical and economic conditions in those countries, market demand based on fluctuations in the fashion industry as a whole, as well as overall labor costs.  We see it all.)

But if market prices fluctuate that much based on just a handful of factors, why risk undervaluing the piece at all and just provide an annual appraisal?

That is certainly an option; however, for the same reason we are here to prevent you from paying too much in insurance for unnecessarily high appraisals, we also don’t want to unnecessarily charge you update fees year after year.  Over 4 decades of market exposure and experience, as well as seemingly never-ending training, we have found that 3-5 years is a good average to establish for insurance values to be both economical and accurate enough that the margin of error becomes relatively insignificant.  BUT… anomalies do occur, which is why we also try to encourage all of our clients to reach out to us if there has been some distinct event that could act as a catalyst for greater than average fluctuations in the market.  Ya know, something like a worldwide pandemic or catastrophic geopolitical events that send supply into a tailspin or the market into an economic free-fall.

Insurance is important to keep up-to-date on your jewelry items.  It is actually one of the few things that insurance isn’t egregiously cost prohibitive these days compared to what it covers.  Jewelry coverage has a wide breadth of applications and should be discussed in detail with your insurance agent.  Linked HERE is list of questions we have put together to help you navigate your next jewelry insurance policy with your local agent.  Every insurance carrier is different, but from our experience, they are usually pretty helpful when trying to determine what kind of coverage is best for you.

Let us know if you have any questions as well.  And of course, if you’re in need of an appraisal, please feel free to schedule your appointment HERE.

Joshua D. Lents, FGA, GG