It’s common practice for a jewellery retailer to give a “free valuation”. Whilst this is, in a lot of cases beneficial to the customer, what meaning does it has, and what is that piece of paper useful for?
Firstly, a jewellery valuation shouldn’t be confused with a diamond grading certificate. A diamond grading certificate describes the characteristics of a diamond, whilst a valuation attempts to establish a value. Even though some labs do put a valuation on their certificates, these valuations should be taken with a grain of salt as they are merely selling tools to help the retailer achieve a higher price.
Secondly, by definition, the piece of jewellery you buy is valued at whatever you have bought it for. If it was valued at more, then why would the retailer be selling it to you at such a low price?
Supply and demand, along with other basic economic principles determine the value of a piece of jewellery – not what a piece of paper says.
So what is the purpose of a valuation?
Well firstly, it can be used for insurance purposes. For example, if you buy a diamond ring for $10,000 and the valuation comes out at $15,000, you can then give that to your insurance company, and they’ll insure it for $15,000. However, there is a catch. This $15,000 represents a high retail price. This means that:
- Insurance companies will almost always ask for a hefty discount off the marked price when a customer selects a replacement. A replacement marked at $15,000 may well cost the insurance company $10,000.
- Insurance companies claim that they factor this in, so that the increased price of the valuation does not affect your premium.
- Whilst we get a few people asking to buy diamonds from us for insurance replacement, we have to turn them down as the discounts expected by insurance companies are more than our gross margins.
The other purpose of a valuation is as an appraisal. Since valuations should be done independently, by a member of The National Council of Jewellery Valuers, a thorough appraisal of the piece of jewellery should be carried out. Whilst the tools used by each valuer may vary, they should have both the skills and experience to identify faults in both gemstones and settings.
Jogia Diamonds gives a free valuation with every piece of jewellery (not loose diamonds) purchased. This usually done after the the customer has bought it and is more of a complimentary gesture for those wanting to insure their jewellery than anything else.