Selling Your Estate Jewellery – What is Replacement Value?

You have inherited a piece of jewellery and it comes with an appraisal, and at the bottom of this document is a value…possibly a large one, and you assume that this is the price you will get when you finally decide to part with it.  Likely not.

First of all let us define what is meant by replacement value.  Usually on an appraisal there will be a line at the bottom with will have a similar message to…Replacement Value For Insurance Purposes Only.  This basically means that if you lose the item in question, and would need to replace it with a NEW one (or something comparable) at FULL RETAIL price, with no discount (almost all jewellery is highly marked up at stores and then sold at a `discount`)…and made some allowance for the insurance company charging you a deductible, or not settling for the full amount (which is often the case)…this is how much the item should be insured for.

Now, the last paragraph is a bit to swallow…so let us use an example of a car.  Imagine you have a 1982 Ford Taurus (just a little rust but otherwise in great condition), and you approach your insurance company and tell them that you want to be insured for the REPLACEMENT VALUE of this item, in other words if you lose your car you want a NEW comparable car.  Of course we are not experts in car pricing, but likely a new vehicle in 2011 would cost at least $20,000.  So is your 1982 Ford Taurus worth $20,000?…  only if you are lucky enough to have it stolen.

Jewellery is much like other clothing items.  Fashion is an important part of the value.  Most items a generation or so old, are practically worthless from this perspective, and so to determine the value based on what a new one of current fashion would cost is much like comparing a 1982 Ford Taurus with a 2011 model.  Of course, jewellery is made of gold and gems…this will always hold value…but is usually only a small percentage of the retail price.

When looking at the value of something, it is really important to understand the reason for determining a value.  Replacement value appraisals are important for insurance, but can be quite misleading when it comes time to sell.

What is your item worth if you wanted to sell it?  Call us today at 514-289-9761 for more information.

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