Popular designs selling over MSRP
This scenario happens more often with popular watches in short supply. Two that immediately come to mind are the Patek Philippe World Time and the Rolex Daytona in stainless steel. These watches trade in the secondary market at prices significantly higher than MSRP, as they are scarce. If you appraise these watches at their MSRP and the client suffers a loss, they will not be able to replace the watch because it is out of stock. Instead, they will be placed on a waiting list for as long as a year before the watch is available. Insurance companies are in favour of quick and timely indemnification. They prefer to replace an item with a minimum of fuss. This is why appraisers should not turn to the auction market to find comparable sales. There is no guarantee a suitable replacement item would become available in a timely manner. With this in mind, I research the value of the same model Rolex Daytona in the secondary market for ‘new in box’ or ‘like new’ replacements. These watches trade at prices higher than MSRP, but are readily available. I clearly state the market researched and the reasons why I chose this market in the appraisal report next to the replacement value. I also explain this to the client, so they may discuss the right type of coverage with their insurance representative.
Caught in the middle
It’s not surprising appraisers find themselves caught in a battle between a client and their insurance company. Our appraisal reports are used by clients to purchase insurance coverage. They are also used by insurance companies when underwriting policies and are carefully scrutinized when settling claims. An appraisal report with a credible explanation of the research, analysis, and value conclusion is a document that can be useful to both parties when arriving at a resolution. This is particularly important when dealing with non-tangible value elements, such as brand names. Just remember the standards and ethics with which you comply and remain impartial.
My opinions are based on sound appraisal theory and methodology. Even so, they are my professional opinion and do not reflect those of this publication. If you are faced with similar challenges when appraising branded jewellery, I invite you to comment. Let’s keep this discussion going!
Gina D’Onofrio has provided gemmological and jewellery appraisal services since 1992. She is an accredited senior appraiser, master gemmologist appraiser (American Society of Appraisers) and certified senior member of National Association of Jewelry Appraisers. D’Onofrio is co-instructor for the American Society of Appraiser’s GJ-202 appraisal report writing for insurance coverage class. She may be contacted via e-mail at firstname.lastname@example.org.