The $12,000 Appraisal

Last month, a customer brought me a sapphire ring she'd bought from a high-end jeweler. She paid $4,200 for it. The jeweler's appraisal said: $12,000.

"Is this accurate?" she asked. "Should I insure it for $12,000?"

I examined the ring. 1.8ct heat-treated Australian sapphire, eye-clean, good color. Platinum solitaire setting.

My appraisal: $4,500-$5,000.

The jeweler had inflated the value by 150-170%.

The Real Numbers

Here's what happens when you insure a $4,200 ring at an inflated $12,000 appraisal:

Why Jewelers Do This

1. Insurance Referral Commissions

Most jewelers partner with jewelry insurance companies (Jewelers Mutual, Chubb, etc.). They get 10-20% commission on the first year's premium for every referral.

Example:

• Inflated appraisal: $12,000
• Annual premium: $200
• Jeweler's commission: $20-$40

Multiply by hundreds of customers per year = significant revenue stream.

2. Replacement Sales Guarantee

If your ring is lost/stolen, insurance pays the inflated appraisal amount. You return to the same jeweler for replacement.

Example:

• You paid: $4,200
• Inflated appraisal: $12,000
• Ring is stolen
• Insurance pays: $12,000
• Jeweler sells you replacement: $4,000 (their cost)
• Jeweler pockets: $8,000 profit

You paid inflated premiums for years, and the jeweler profits massively from the claim.

How to Protect Yourself

Step 1: Get Independent Appraisal

Never use the jeweler's appraisal for insurance. Get an independent appraisal from a certified gemologist (not affiliated with the seller).

Cost: $75-$150
Savings: $1,100-$1,500 over 10 years

Step 2: Compare Appraisal to Purchase Price

If the appraisal is 2X+ your purchase price, it's inflated.

Red flags:

• Paid $4,000, appraised at $10,000+
• Paid $2,000, appraised at $6,000+
• Appraisal is 200-300% of purchase price

Step 3: Shop Insurance Independently

Don't use the jeweler's insurance referral. Shop independently:

• Jewelers Mutual: Direct (no jeweler commission)
• Homeowners/renters policy rider: Often cheaper
• Standalone jewelry insurance: Compare quotes

Step 4: Insure for Replacement Cost, Not Inflated Value

Insure for what it would actually cost to replace the ring—not the inflated appraisal.

Real Example: My Customer's Experience

The customer with the $4,200 ring appraised at $12,000:

What She Was Doing (Before)

• Insuring ring for $12,000
• Paying $200/year in premiums
• 10-year cost: $2,000

What She Did (After My Appraisal)

• Got independent appraisal: $4,500
• Switched to homeowners policy rider
• Now pays $70/year
• 10-year cost: $700
• Savings: $1,300 over 10 years

Questions to Ask Your Jeweler

Before accepting an appraisal for insurance:

1. "Is this appraisal for insurance or resale?" (Insurance appraisals are often inflated)
2. "Do you earn a commission from insurance referrals?" (Most won't admit it, but ask anyway)
3. "Why is the appraisal 2-3X what I paid?" (There's no good answer)
4. "Can I get an independent appraisal?" (Honest jewelers will say yes)

The Bottom Line

Jewelers inflate appraisals 2-3X to earn insurance referral commissions and guarantee replacement sales. You overpay $1,100-$1,500 in premiums over 10 years.

How to protect yourself:

• Get independent appraisal ($75-$150)
• Compare appraisal to purchase price (should be similar)
• Shop insurance independently (no jeweler referrals)
• Insure for actual replacement cost, not inflated value

Spending $100 on an independent appraisal saves you $1,200+ over 10 years.

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