You’ve just purchased a gorgeous necklace and the business owner provided a single-page appraisal document that you’ve been assured is sufficient for your insurance provider. When you submit the appraisal to your Broker, you find out it’s been rejected by the insurer. What happened?
An appraisal determines the replacement value of your property or possessions. This seems relatively simple but there’s actually a lot that is required in an appraisal. And if your appraisal doesn’t have all the requirements, you risk not getting the coverage you need or having to go through the process of obtaining another appraisal.
A single item may have up to five different values, with the most common being the following:
- Retail Replacement Value is used primarily for insurance purposes and is the highest amount that would be required to replace a property with another of similar age, quality, origin, appearance and condition.
- Fair Market Value represents what the property or possession would be worth in an open market where both the buyer and seller are under no pressure to complete the transaction, and both have knowledge in regard to the item being valued.
Values of art, collectibles or jewelry can change dramatically leaving your Insurance Broker to rely on an appraisal that has been performed by a qualified expert in the field such as a fine art appraiser, gemologist or goldsmith. A proper appraisal will contain the following information:
- Your name and address
- Date and location of the inspection, appraisal and report issuance
- The method of valuation and the market in which the valuation is applied
- A cover document explaining what type of value is being sought and how the appraisal is to be used
- Information that is descriptive enough that photos would not be needed but still contains images
- Certification of Appraisal for each item appraised
Handwritten appraisals will be rejected, as will appraisals that have not been signed. Another warning sign of an improper appraisal is if the fee for the report was determined based on the value of the item.
A trusted appraiser will have evidence of years of expertise and training in their market, with qualifications that are up to date. Your appraiser will also hold a current membership in a recognized personal property association, such as the International Society of Appraisers (ISA) which has a chapter within Canada. To be confident your property or possessions are being appraised properly, speak to your Broker about the items in question and they may be able to recommend an appraiser. The ISA also provides a directory of qualified appraisers that is searchable by specialty.
